It started as the premier brand for Tanzania’s first local privately-owned tea company after liberalisation of the industry in the 1990s. Two decades on, Chai Bora Limited is a leading tea manufacturer with multiple brands and an ambition to move beyond tea.
In 2008 Kenyan investment company TransCentury acquired the brand from its previous owner, Tanzania Tea Packers Ltd (Tatepa). And in 2013 TransCentury exited the business to East Africa-focused private equity fund, Catalyst Principal Partners.
Chai Bora recently transitioned from a medium to a large-sized company, which in Tanzania is represented by a business crossing over the Tsh.20bn (about US$11m) annual turnover mark.
Chai Bora managing director Kapila Ariyatilaka tells How we made it in Africa the company has succeeded due to good management, its quality offering of diverse products that suit consumers of different economic status and taste, and its strong brand.
Expanding to new markets
Chai Bora means “great tea” in Swahili, a name Ariyatilaka notes resonates well with Tanzania’s Swahili-speaking public. Its product line includes the Chai Bora brand, the creamer-based Amor Flavoured Milk Tea, the instant coffee Café Bora, and the African Infusions organic herbal teas range.
After years as a key player in Tanzania, Chai Bora is expanding to new markets, including neighbouring Kenya where there is a large tea drinking culture but a more competitive market with multiple brands jostling for space on supermarket shelves.
The company has also set its eyes on becoming a leading food and beverages player.
Chai Bora recently acquired Dabaga’s – a local manufacturer of tomato ketchup, jams and pickles – where it is adding new production facilities. The firm is also eager to grow its coffee business and is investing in upgrading machinery.
Although most of Tanzania’s neighbours grow and produce their own coffee and tea, Ariyatilaka says there is opportunity to sell its products in East Africa and markets beyond the region.
Tanzanian tea is “smooth”, he says, and can be appreciated even by people who are not usually fans of tea.
“Tea from other countries like Kenya is strong. It’s like beer; you have to acquire the taste. In Tanzania most people don’t like a strong cup of tea. That is why we make a specific blend for the small percentage of people who love that instant kick [of strong tea].”
What does private equity bring to the table?
One of the firm’s strengths as it expands its product line and market reach is the support of its private equity investors.
Ariyatilaka says when PE funds like Catalyst acquire a company they focus on the direction the business should take, areas in which to invest, and what is needed to achieve growth. For example, funds tend to invest in consultants, and hire top talent in management and technical fields.
“We put in strong financial management systems and procedures to ensure the business not only grows, but grows in a way we can manage. In Africa, companies lose a lot of money due to theft, misuse and overspending. We try to manage that aspect very carefully,” he explains.
“An individual may have a great idea but they can’t execute it because they need $1m, which they don’t have. For a PE fund, figuring out the money is easier.”
Nonetheless, like other companies operating in Tanzania, Chai Bora faces challenges. One is handling logistics and ensuring its products are available across the country’s vast geography. And in its pursuit for wider markets outside the country, there has been limited support from government.
Talent is also limited, and often expensive. As Tanzania opens up and more foreign companies and investors enter the market, Ariyatilaka warns that businesses which don’t hire the right people are bound to fail.
This is because the country is a unique market with a different work ethic, culture and regulatory requirements, and can prove challenging even for businesses expanding from other African states.
“If you don’t have people who know the country at the top management level you will have difficulties. I have been here for the last 20 years and have learnt how it works,” he adds.
“I would strongly recommend new investors to come in the form of PE funds. If you come as an individual investor, be sure to get the right people.”