Kenafric: Building a pan-African consumer goods company

Workers at a Kenafric factory

Workers at a Kenafric factory

Kenyan consumer goods manufacturer Kenafric Industries is one of East Africa’s largest privately-owned indigenous firms. From humble beginnings it has grown to become a pan-African enterprise trading in 22 countries and employing 1,800 people.

The business, owned by the Chedda family (all the individual members go by the Shah surname), was founded in 1987 by four brothers and their father. Today it competes with global giants such as Unilever, Bata Shoe Company and Wrigley.

Rebuilding father’s distribution business

The family’s roots are typical of many successful Indian families in Kenya. The brothers’ father, 83-year-old Velji Punja Shah, emigrated from India to escape a drought – arriving in Kenya on a steamboat. He had built a successful trading business in Nairobi, distributing fast-moving consumer goods for local and multinational manufacturers.

But it has not always been an easy journey for the family and their entrepreneurial ventures. Towards the end of July 1982, Mayur Shah and his brother Kirtan flew to Kenya from the US (where they were studying) for the wedding of their eldest brother Bharat.

But on the Sunday morning of 1 August, a week before the wedding, the family woke up to find their business “wiped out entirely”. A group of soldiers had attempted to overthrow former president Daniel arap Moi’s government, and although the coup failed, more than 140 people died and property worth millions of dollars was destroyed and looted in the six hour melee.

“[People] broke into [our father’s business], and the crowds took everything and anything. Luckily, no one got injured or killed within the compound. But we were shattered. We completely lost everything. All the money my father called his own was in the stock that got looted. We were on ground zero,” says Mayur, co-founder and senior executive director of Kenafric. “It was a difficult time for us as a family.”

Despite the setback, they successfully rebuilt the distribution business which became the foundation of Kenafric Industries. By the late 1980s all four brothers had returned to Kenya armed with degrees from universities in the US and India.

Getting into the manufacturing business

When an opportunity to buy a small plastic footwear manufacturing business emerged, they took it. In three years, Mayur says, the shoe business rose to become the leading market player.

“We studied our competition, innovated new products, and we came out on top. Our first product was a women’s shoe brand called ‘Dancing Queen’. It was a sandal with a little heel and a buckle on it. I remember those days there were long queues outside our facility because women loved it – not just in Kenya but also in Uganda and Tanzania. It was a big hit, and it gave us a boost,” Mayur recalls.

An oil crisis in the early 1990s prompted the family to diversify into manufacturing confectionaries. As the prices of oil went up, inputs for the shoe manufacturing business became more expensive. So they bought a bubble gum machine from Taiwan and started production on a small scale.

“When my father started his first business in 1969 the first product he sold was Orbit chewing gum (manufactured by American multinational Wrigley) which is today our competitor. So we knew confectionary is good business and we wanted to do more than just distribution.”

Focusing on exports

But what really catapulted Kenafric from a small family business to the big ​league, was the decision to embark on exports early on.

We started going to Tanzania, Uganda, Malawi… Ethiopia was a very big market for us.”

Mayur personally led the expansion mission, traversing Africa to scout for opportunities. So extensively that in 2012, Kenya’s national carrier, Kenya Airways, awarded him for being one of its top frequent fliers.

He says Kenafric has found success in about 80% of the countries it has expanded to. But some markets like Swaziland have been harder to crack.

“They were married to Brazil because of logistics. It would take two to three weeks to ship goods from Brazil [but much longer to ship from Kenya]. I really tried, and up to today I am still trying. I have not given up. It is my ambition that one day we will get to Swaziland. Getting goods from Kenya to Swaziland takes a really long time.”

Logistical hurdles

But running a pan-African operation comes with numerous logistical hurdles.

“Getting goods to Kinshasa (the capital of the DRC) is a nightmare. You have to take things by sea from Mombasa to Cape Town, which is the easy part. From Cape Town to Matadi (the chief sea port of the DRC) takes four to five weeks. From Matadi to Kinshasa the roads are impassable, so its takes another couple of weeks. In total, you are looking at months.”

In each market, Kenafric has appointed distributors that help get its goods into the country and across retail outlets.

“This is where multinationals are perplexed, and why we are successful. In places where the roads are impassable we give [our distributors] motorcycles and we appoint some people to act at the supervisory level, and this has been very successful. In every corner of Kenya you will find our goods. We estimate there are about 120,000 retailers in Kenya, out of which about 80,000 stock our products, and our target is to reach the remaining retailers in the next two years,” says Mayur.

Growing with young customers

But good distribution is not the only reason for Kenafric’s growth. It is successfully targeting children with its products, branding and marketing tactics. One of its bubble gum brands, called Cinderella, comes with free nail stickers. Its other confectionery brands have catchy names like Selfie, Zing and Obama Pop, and come in colourful packaging.

The business is now evolving to introduce products that appeal to its customers as they grow up.

“We are already studying how children born in the 2000s will behave 20 years from now as consumers – their traits, their lifestyle and purchasing habits. Twenty years from now, what will they be buying? We are thinking far ahead, and that is one of the secrets of our success.”

Passing the baton

A third generation is now actively involved in running the business. The children of the four founding brothers have been instrumental in helping Kenafric keep up with changes in customer tastes.

“We took some courses as a family, and we had sessions with great lawyers and discussed and agreed on everyone’s role. Of course it was tough passing the baton to the next generation. But what we are seeing is they are doing a great job. They are hungrier for business, and they have that drive and passion.

“We also didn’t grow up with computers, but they are really good at social media, marketing and branding. They will do a better job than us.”

But what if the younger children don’t perform as expected?

“We will forgive them and love them unconditionally. Mistakes will make them better. They have to make mistakes to learn. Sometimes they move too fast and we have to tell them: ‘Hey, slow down a little bit.’

“But we have confidence in them, we have to give them all the support. And they have to respect the co-founders,” says Mayur. “We want to leave a legacy.”