Kenya’s middle class a growing market for ice cream manufacturer

Kenya-based ice cream producer Alpha Dairy was established 12 years ago to fill a gap in the market and has since grown to become one of the country’s leading brands. According to the firm’s director Fahim Kurji, a humanitarian lawyer turned businessman, his family enjoyed good quality ice cream when they travelled abroad, but would have to settle for lower quality products back home.  

“We used to get a lot of complaints from friends [and] family that imported ice cream was too expensive and the local ice cream available at the time was garbage. There seemed to be a growing set of people in the middle that were willing to pay more for good ice cream but not for overpriced imported stuff.”

Kurji’s father, the successful entrepreneur behind the conglomerate Alpha Group, set up the dairy company with no business plan.

“It was all a case of there was no good ice cream in this country so let’s change that,” says Kurji. ”Our ethos has always been to make a better product than what is out there and to give consumers a taste of what real quality is.”

The family’s goal was to run a small operation processing about 500 litres of ice cream a day within two years.

“We have been growing steadily throughout the years since then. Today we process between 3,000 and 5,000 litres of milk a day and we have expanded our product offering to include yoghurt, which is a very popular item in Kenya. On average we produce 2,000 to 3,000 litres of ice cream and 2,000 litres of yoghurt a day.”

Alpha Dairy offers franchising opportunities to entrepreneurs and has set up dozens of parlours in major urban centres across Kenya. According to Kurji, the company has only tapped “50% of Kenya’s potential”. The firm’s ice cream brand Ooh! also sells in Uganda.

Initially Alpha Dairy targeted the top end of the market because a decade ago the perception was that only the rich could afford ice cream.

“Now the middle class is growing significantly and there are lots of people making the jump. We are looking at a million people who have disposable income [to spend on ice cream].”

Selling ice cream to the health conscious

Alpha Dairy has introduced a premium range of ice cream to cater to the upper market where opportunities are dwindling as people become more health conscious.

“What we have seen is putting a parlour in an upmarket area is normally a bad idea. Where you have the middle class is where the parlours do well. We have actually changed our strategy now and we are looking to concentrate on this middle class market. It is an emerging market. Ice cream is still very much a treat for them, they are not as calorie conscious and neither are they as fat that they need to be calorie conscious.”

Alpha is also looking to tap into the mass market and recently acquired an extrusion line from Italy to make high volumes of low price product.

“We want to make our lower end of the market product as affordable as a bottle of soda” says Kurji. “There will always be a place for ice cream. As long as there are children, there will always be a market. If you look at the soft drinks market – considered one of the unhealthiest sources of calories around – [yet] it is continually growing. So we see a bright future in that respect.”

In the meantime Alpha Dairy is piloting mini-ice cream parlours in small satellite towns with the hope of expanding its reach beyond urban centres and formal retail outlets.

Entrepreneurs have to wear several hats

However, Kurji notes that red tape, poor infrastructure and limited outsourcing opportunities for the transportation of products are a constant headache.

“If you ask me what my job is today, as much as I want to say I am an ice cream maker, I am only half an ice cream maker and half a logistics manager, which is not what I would want to be. Most entrepreneurs here have to wear several hats.”

The instability of milk prices also makes planning harder.

“Milk prices can fluctuate by up to 100%. We face even more difficulty with the sugar. Every once in a while you hear that the [sugar manufacturers] don’t have enough sugar and there are import restrictions.”

Kurji advises entrepreneurs to aim for organic growth and “let the market dictate how quickly and how big” their businesses grow.

“Financing in this country is exorbitant so the minute you start making plans based on borrowed money you are asking for a lot of trouble.”

The humanitarian lawyer says he has no regrets about leaving his career to help run the family business.

“I am very happy here. I make ice cream for a living, how many people can say that? We are a family of at least six generations of businessmen so business is in the blood. The integration was pretty much seamless. For me, the concurrent thing between the two professions is job satisfaction. It’s a great source of pride when people say they had our ice cream and that it was amazing.”