Within two days from the time flowers are cut at Kenya’s flower farms they are available for sale in markets such as Sweden.
From the farms the flowers are transported to handling facilities at Nairobi’s Jomo Kenyatta airport before they are put on an aircraft to Holland. About two thirds of the flowers are sold at the Dutch flower auction in Aalsmeer after which they are re-shipped to their final destination. All this in less than 48 hours.
The flower industry in Kenya has grown progressively from modest beginnings in the mid-1980s. Within 20 years it has emerged as one of the world’s leading flower exporting nations. According to some estimates, Kenya has a 38% market share of flower supply in Europe.
The industry has also attracted the attention of Agri-Vie, a private equity fund focused on food and agribusiness investments in sub-Saharan Africa, which recently announced a US$5m investment in Kariki Group, a specialist flower exporting business.
Kariki was founded in 2002 by brothers Richard and Andrew Fernandes, at a stage when the European floriculture sector became less cost competitive and began shrinking. The company operates from four different sites in Kenya, all at different altitudes.
Dave Douglas, investment advisor at Agri-Vie, told How we made it in Africa that an opportunity to invest in Kariki came about when some of its previous shareholders wanted to cash out to pursue other investments.
Although Kariki is not one of the largest players in Kenya, Agri-Vie was particularly impressed with the way the business is being run.
“Their standards are extremely high and… what we do like about them… is the way in which they included staff participation at all levels in the running of the business. You know, with 1,200 people in this flower business and getting every single one of them involved in the process of continuous improvement is extremely impressive… The business is financially sound. It is a business making money, it’s profitable and it’s correctly structured. All those things together we felt was a very impressive formula for us,” said Douglas.
Agri-Vie will not get involved in the day-to-day running of Kariki, but it has two seats on the board and will give strategic advice to the company.
Growing flowers on the equator
Kariki’s main market is currently Europe. Despite the fact that flowers need to be transported thousands of kilometres from Kenya to Europe, it is still cheaper to source them from the equator, says Douglas.
“In Europe… you have a very short summer, and to extend the growing period you then have to put in artificial lighting and that is very expensive with the cost of energy today. With the advantages of growing on the equator, where you don’t really have seasons, you are able to grow all year round.” He added that the high altitude is also good for colour development in the flowers.
Douglas noted that Kariki has the opportunity to further expand into markets such as Australia and Asia.