Kenyan supermarkets stock dozens of potato chip brands, but one of the new market entrants, Urban Bites, easily stands out with its matte packaging and Nairobi skyline design in the background. The Urban Bites brand, produced by Norda Industries Ltd, has proved to be one of the most popular in the market. Faraz Ramji, a director at the manufacturer and distributor of potato and maize based snack products, told How we made it in Africa’s Dinfin Mulupi how the firm stumbled upon the Urban Bites brand, the challenges of doing business in Kenya and why the snack market is experiencing growth.[hidepost=9][/hidepost]
Tell us about yourself.
I grew up and went to school in England but I am of East African Indian origin. I have always had a passion for Africa and after my university course in development studies, I moved to Rwanda where I set up a rehabilitation project for former street children. My grandparents have built a successful business in Rwanda. They started making soap by hand in 1962 and their business – Sulfo Rwanda Industries – has since modernised and expanded to include other fast-moving goods like cosmetics, plastics, mineral water and sweets. It is now the second largest manufacturer in Rwanda.
How did you end up manufacturing savoury snacks in Kenya?
My grandfather, Tajdin Hussain Jaffer, wanted to start a business in Kenya and he convinced me to join him. We bought land here and started constructing warehouses. When he went for surgery in South Africa he saw corn bites (Niknaks as they are known over there) at almost every street corner. He spotted an opportunity because maize, oil and packaging are locally available in Kenya.
We started business in Kenya with our Crunchy Corn Bites at a time when nobody was doing corn snacks here and that gave us leverage. When our technical team went to purchase more extruders abroad for the corn product, they found equipment for making potato crisps and bought it on a whim. After four months of procrastinating we finally decided to start making potato crisps and introduced our Urban Bites brand, which has become very popular in Kenya. We basically stumbled on this business. We currently have 20 different products selling in Kenya and we export to Rwanda and Uganda. We produce approximately 500 tonnes of snacks a year.
Five years ago when we entered the market, you either had imported products that were extremely expensive or good quality local products that were packaged poorly. We saw the niche in finding a middle ground: a local product of international standards. The Kenyan consumer is extremely sophisticated and that means manufacturers have to keep up. It is a do or die [situation]. Kenyans are very particular about packaging, standards and hygiene.
Other food businesses here say finding reliable suppliers of good quality farm produce is a struggle. How do you source your raw materials?
In the beginning we experimented with different types of potatoes and sometimes the outcome wasn’t very good. I went on Google and searched for ‘potatoes supply Kenya’. I stumbled on a group of farmers in Bomet who had received training from the International Potato Centre and the Kenya Agricultural Research Institute (KARI) on how to grow potatoes specifically for crisps. The 200 farmers were struggling to find access to markets. We took samples and after trials we chose to work with two groups. They supply us with 100 to 120 bags of potatoes every week. This is a win-win for all of us because we cut out the middlemen.
Describe the challenges you face.
It is very challenging to do business in Kenya. There is a lot of licensing and red tape, which can be very frustrating. Supplies is another major challenge for us. We work with these wonderful farmers who aspire to give us the right quality product but sometimes do not plan carefully. We have also been growing so we did not know what the demand would be like, yet they have to plan six months in advance. This and climatic challenges have affected production, leading to shortages. I remember once I had to call one of my competitors to ask for potatoes. We have to help the farmers with irrigation techniques. We also have to diversify so that all our potatoes do not come from the same region so as to reduce the impact of unpredictable weather patterns.
What is driving growth in the snack market?
People are living much faster lives. They do not have time and they need something to eat on the go. We also have more disposable income. Kenya has been a traditionally sweet snack market; they like biscuits and sweets. We are really trying to grow the savoury snacks segment.
A lot of people are becoming more health conscious. Isn’t that a threat to your business?
I think the East African consumer is more concerned with what looks good and what tastes good right now. That does not mean it is not going to change. If we see huge demand for dried fruit crisps or baked crisps (healthy varieties), then we will be heading that route. Our business is consumer driven. The consumption of snacks is high, even in the US and European market where people are more health conscious. There is always room for snacks. Kenyan consumers are becoming health conscious but that doesn’t mean they don’t enjoy tasty crisps once in a while.
What advice do you have for other entrepreneurs?
Have a clear vision of where you want to be and adapt to changes as you go along the way. We started out focusing on corn products and they are doing well, but we also stumbled upon potato crisps and it has turned out to be a great opportunity. Be flexible and fast to adapt to changes.