Kenyan company tapping into ‘multibillion-dollar’ fish-farming opportunity
Victory Farms grows the tilapia species of fish in Lake Victoria in Kenya.
Tilapia producer Victory Farms has built a vertically integrated business which includes everything from a fish-farming operation in Lake Victoria to its own distribution network and retail branches. Tom Collins spoke to Joseph Rehmann, CEO and co-founder of Victory Farms
Unlike other commercially farmed fish, scientists and researchers have yet to pay serious attention to tilapia, a freshwater fish native to Africa. While tilapia is among the most commercially farmed fish globally, it is largely done by smallholder farmers and often in less-developed countries. It has therefore been largely ignored by businesses, universities and other institutions, which have focused more on species like salmon.
This is the view of Joseph Rehmann, CEO and co-founder of Victory Farms, a tilapia company on the shores of Lake Victoria in Kenya. The species is not widely consumed in Western countries; therefore, businesses have not invested time and money to work out the most efficient way to farm the fish.
Rehmann believes that despite the lack of investment, the tilapia industry presents a multibillion-dollar opportunity. “The tilapia story in Africa is huge,” he says. “And there aren’t many companies looking at tilapia from a commercial standpoint.”
Creating new fish-farming techniques
Victory Farms started operations in 2016 and it aims to become one of Africa’s largest commercial tilapia farmers. The company had to design its own fish-rearing process as one of the pioneers of tilapia-rearing on a commercial scale in Africa.
“There’s almost nobody manufacturing tilapia equipment currently in the world, which is an amazing statement because it’s one of the world’s top three farmed fish. It is farmed by millions of smallholders and feeds billions of people. Yet, because it’s a smallholder industry, there has never been serious investment into the fish.”
Victory Farms sells most of its fish to informal market traders.
The CEO says it was crucial to not simply duplicate techniques from other commercially farmed fish but instead create a method appropriate for tilapia and Africa. “We couldn’t just copy and paste the recirculatory aquaculture system (RAS) fishing style in Holland; the pond system from Thailand or the cage system from Norway. It required a hybridised approach. We believe Africa requires its own solutions.”
At first, Rehmann and his co-founder Steve Moran were told Lake Victoria was not suitable for aquaculture as it was too nutrient rich, shallow and cold. However, after technical and commercial feasibility studies, they decided Africa’s largest lake was ideal for tilapia.
He explains Victory Farms has one of the largest fish farming cage systems installed in a lake in Africa.
The company also designed its own RAS technology, suitable for an open environment like Lake Victoria. RAS is usually used in indoor tanks; the water is filtered and recycled back to the fish. But Victory Farms has created a hybrid model where the fish are reared in a natural lake. They are fed protein and carbohydrate pellets with no antibiotics. This unique process is more efficient than other RAS techniques, which puts the company in a good position to compete with large global producers.
Victory Farms has around 30 million fish alive at any one time, and sells about two million tilapia each month. “If you look at our growth trajectory in just a few years, it is the fastest on the continent. If you look at our capital efficiency, we are significantly more efficient than some of the world’s largest tilapia farmers.”
A Victory Farms distribution truck.
Vertically integrated model
Victory Farms has built a fairly innovative sales and distribution system, delivering fish to hundreds of market sellers in 12 counties across Kenya each day. The vertically integrated model enables the company to ensure the effective delivery and sale of the fish.
Previously, it had struggled with external logistics companies that would switch off refrigerators to save fuel costs, leading to the deterioration of the fish.
“We supply our own 56 branches each day and aim for 65 by the end of the year. Our cold trucks travel across Kenya delivering fresh fish to the branches daily,” Rehmann reveals.
“These branches sell to market ladies through M-Pesa, so it’s all cashless. And the ladies typically cook them and sell them the same day.”
None of these 56 branches, which are branded retail outlets belonging to Victory Farms, has ice or refrigeration equipment; all the fish is sold within one day. To make this possible and not lose any fish to decomposition, Victory Farms maintains a data set on every single market trader to predict how much fish they will sell. The market traders input orders and sales via an SMS platform.
“We can accurately forecast exactly how much fish to stock in the branch tomorrow, so we have no spoilage. Our wastage is below 1%.”
Around 90% of Victory Farms’ produce is sold to these market traders and 10% go to hotels and restaurants. Rehmann says the company will eventually look at supplying Kenyan supermarkets but the focus so far has been “on the mass market” which provides access to 48 million consumers compared to only two million consumers in higher-income areas.
Victory Farms CEO Joseph Rehmann’s contact information
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