East Africa: Flame Tree Group CEO talks manufacturing opportunities and competing with multinationals

Heril Bangera, CEO of Flame Tree Group


Trends watch
– Kenyan consumers are increasingly scrutinising the ingredients and benefits of cosmetics products.
– Social media plays an important role in influencing purchasing decisions when it comes to cosmetics.
– Due to Covid, many women in Kenya no longer want to go to a store to purchase beauty products. A strong e-commerce presence is therefore critical.

Success strategies
– Localising packaging material, e.g. Portuguese labelling in Mozambique.

In the late 1980s, an 18-year-old entrepreneur, Heril Bangera, ventured into business with modest dreams of manufacturing four plastic water tanks per month. Growing up in a middle-class suburb in Nairobi, Kenya, he witnessed firsthand the challenges around water harvesting and storage. Most people used steel tanks at the time. But he saw an opportunity to manufacture affordable plastic tanks.

Bangera started Roto Moulders Limited with a modest amount of capital from his father. The company has since morphed into the Nairobi Securities Exchange-listed Flame Tree Group (FTG), a diversified manufacturer of plastics products, cosmetics and food items with a presence in Kenya, Rwanda, Ethiopia and Mozambique. Bangera is CEO of the group.

How we made it in Africa recently caught up with Bangera to find out more about the opportunities he sees in the region, trends in the cosmetics industry and how FTG competes against multinational companies.

FTG started out with the manufacturing of plastic water tanks in Kenya over three decades ago. How has your plastics business grown and evolved over the years?

Our first business was plastic water tanks in Kenya. From there, we expanded into a number of countries with basically the same product.

As the company ventured into the cosmetics industry, we saw an opportunity to manufacture the caps and bottles for the cosmetics products. This opened our eyes to the opportunities to make additional plastics products. So we got into a range of plastics items – from HDPE pipes for water transportation, to nets for packaging vegetables in supermarkets, to recreational playground equipment for children.

FTG manufactures a variety of plastics products

We have plastics factories in Kenya, Rwanda, Mozambique and Ethiopia. The problem with plastic water tanks is they are quite bulky to export across borders, so we needed local manufacturing in these countries. However, this also gave us a great opportunity to increase our range of plastic products in these territories.

In terms of the plastics business, for what type of products do you see the greatest growth opportunities?

I think we are still in the initial stages of Africa’s growth, so there are growth opportunities for all the products we manufacture. There are also opportunities for new products. For example, when Kenya banned polyethylene bags, we started making plastic nets to package products such as potatoes and onions in supermarkets.

FTG also manufactures a range of personal care and cosmetics items, including lotions, haircare products, makeup and nail polish. Describe some of the beauty and cosmetics trends in the countries where you operate?

When we started with cosmetics many years ago, the packaging of local products was not at the same level as international brands. However, local consumers have become more conscious and selective about the products they buy, which has led to an overall improvement in the quality of domestic brands. There is a definite trend of consumers questioning product ingredients and benefits. Social media is also playing a big role in influencing purchasing decisions when it comes to cosmetics.

Due to the Covid epidemic, we also see that many women no longer want to enter a shop to test beauty and makeup products. A strong online presence is therefore more important today than it was a few years ago.

How does FTG compete against the multinationals operating in the personal care and cosmetics segment?

The multinationals are good at what they do, but our strategy is to localise our products for the domestic market. Our price points need to be affordable for the local market and the packaging needs to be relevant.

The products of multinationals are typically the same throughout the world – the price points are roughly similar and the perfume of products sold in Kenya are the same as in Thailand and South Africa.

We’ve been able to tailor our brands for the local market. For example, we launched a range of lotions in Mozambique earlier this year and all our labelling is in Portuguese whereas multinationals import products with English packaging. Mozambique is a fairly small market, so I assume it is quite a process for them to localise the labelling.

In addition, I believe we can react faster to local situations than multinationals. We also target a much bigger percentage of the market as many of our products are aimed at the masses.

A SuzieBeauty retail store. The cosmetics brand was acquired by FTG in 2016.

FTG has acquired several businesses over the years, including cosmetics labels such as SuzieBeauty and Miss Africa, and food and snack brands from Chirag Kenya. What is your strategy in terms of acquisitions vs starting businesses from scratch?

Our strategy is both organic growth and acquisitions. Personally I love acquisitions. When you start a business from scratch you make many errors, while if you buy an established company, many of those errors have already been made. Acquisitions therefore save a lot of time.

We are constantly looking at businesses in the plastics and FMCG sectors. However, for us to buy a company it needs to be scalable with a strong brand. The price also needs to be right. Every entrepreneur thinks their business is more valuable than it really is. If you overpay it is very difficult to achieve an acceptable return on investment. Company culture is also an important consideration. If the culture of a company you acquire is too different from yours, it takes a lot of effort to integrate the new business.

Are you looking for acquisitions only in the countries where you are currently present, or throughout the continent?

We consider ourselves an African group. Our strategy is to be pan-African, so I would like to see us do more acquisitions or expansions into other countries across the continent. All our acquisitions have been in Kenya – such as the recent one where we bought a playground equipment company – but that is only because we are based in Kenya, which makes it easier to find opportunities. However, we are looking across the continent.

What are the lessons you’ve learnt from expanding to other African countries?

Our strategy is to be pan-African rather than to be exposed to only one country. All the countries we operate in have great opportunities, but there have been some good years and some bad years in all of them. The lesson I’ve learnt is that it is less about the country itself, but more about the local team. The fundamental thing is to have the best people. Flame Tree Group has been lucky to have had some very good managers running our businesses in some of these locations. Expansion to another country is going to be a few years of hardship, but if you have the right team you can succeed in practically any African country.

Further reading

[July 2020] Entrepreneur sees opportunity for childcare-related e-commerce and information
[July 2020] Nigeria: Former Diamond Bank CEO introduces new digital banking platform
[June 2020] Zimbabwe-based entrepreneur wants to create a global market for baobab products
[June 2020] How Ghana’s Catherine Krobo Edusei capitalised on demand for high-end fresh produce
[June 2020] Figuring out how to produce tomato paste in Nigeria: The story of Tomato Jos