Low income earners the core market for powdered milk maker Promasidor
How we made it in Africa looks at Promasidor's business strategy in Kenya.
In 1979 Robert Rose, a UK national then based in Zimbabwe, started Promasidor and pioneered the concept of selling long-life milk powder in small sachets in the Democratic Republic of Congo (DRC). Over the last three decades, the Promasidor Group has replicated the business model in 30 countries in Africa, selling milk powder, food enhancement products, beverages and children’s snacks in small sachets.
The group’s success has largely been driven by its powdered milk brands Cowbell, Loya and Miksi, especially in West Africa where the dairy industry is not well established. In Nigeria, Promasidor’s Cowbell Milk is the leading powdered milk brand, while the company employs over 1,000 people and supplies neighbouring countries including Benin, Niger, Chad and the Central African Republic.
“From nothing 30 years ago, they have built a business of about US$600m largely based upon milk powder,” says Robert Clarke, managing director of Promasidor Kenya.
“Promasidor has succeeded because it has always targeted its products at the bottom end of the market to provide milk in very small sachets to people who couldn’t afford milk, or to provide Mchuzi Mix [flavour enhancer] in very small sachets to people who couldn’t afford bigger packs. It’s a company that understands Africa because its roots are in Africa.”
While its milk products have been successful in West and North Africa, the business model hasn’t been as successful in countries like Kenya.
“Milk powder doesn’t work in Kenya [because] there is a very large dairy industry here. So, the business model of Promasidor basically doesn’t work here. The company has been here for about 20 years and has tried to do various things including Mchuzi Mix, children’s snacks and some milk powder. But generally, it has not been very large or successful compared to West Africa.”
Soya products
In Kenya, Promasidor has invested heavily in its Sossi brand, a soya product which when prepared, “tastes a little bit like tender meat or chicken”. The product, targeted at low income earners with limited access to protein, was first introduced and successfully adopted in Malawi and Zambia.
“If it works here [Kenya], then it will be the basis of another leg for the group to be rolled out in the rest of the Promasidor world, specifically in West Africa and North Africa,” says Clarke. “The whole project is about, first of all, educating people on the benefits of soya and the fact that you can get a nutritious and beneficial source of protein at the fraction of the price of meat.”
Promasidor works with commercial and small-scale farmers in Kenya, as well as Uganda and the DRC.
“It has never been a particularly important product [in Kenya] because most of the market for soya beans has been in animal feed… supplied from large markets such as India and Brazil [which] grow soya as a means of extracting oil. We are the first company [in Kenya] to develop soya beans for human consumption.”
“Last year we did about 1,000 tons of finished product [from] 1,300 tons of soya beans.”
So far, the biggest challenge Promasidor faces in Kenya is convincing people of the benefits of soya.
“It is one of the marketing challenges [we have] because an average Kenyan’s idea of success… is that you eat lots of meat, you drink copious quantities of beer and you end up getting very strong and large.”
Targeting low income earners
Promasidor hopes to capture the bottom of the pyramid market where most people “can’t afford protein”. The smallest pack of Sossi, a 45g sachet which is sufficient for two people, retails at KSh.18 ($0.20).
“There are people in the chattering classes who will basically have all sorts of ideas about the good things or the bad things about soya, but people who could really benefit from the protein don’t have the luxury of being able to chat about these on their blogs or anything else,” says Clarke.
“We really want to get to the bottom end [of the market]. It will appeal to people who go to supermarkets as well, but the core of our market should be people in the bottom of the pyramid because these are people who can’t afford protein anyway.”
Clarke says that while it may take a while the company sees a return, “Promasidor has never been frightened of investing”.
The company, he says, is hoping to roll out other soya-related products in the future.
“We have a whole range of ideas of what we can do with soya because not only can we do soya chunks, we can get into soya milk, we can do soya drinks… we can get into all sorts of soya-based products. I think that is an opportunity.”
He advised foreign investors in the FMCG sector to have “huge amounts of patience”, take a long-term view and adopt world class standards.
“If you are expecting a quick return in a short period of time you are probably going to be disappointed. You aren’t going to produce an instant success within one or two years, especially if you have investment in manufacturing. Invest in local management people and don’t bring lots of expatriates. If you build your business upon unethical means in the long-term it won’t succeed.”
An optimistic Africa
Clarke, who has worked in Africa for more than 20 year, says Africa’s business environment is changing for the better with more investment from the US and Europe going into wealth-generating activities rather than aid.
“Secondly, you have got this young, talented generation who are gifted people. And even though perhaps not everybody is being educated to an acceptable standard, a reasonable percentage is and therefore you have a skill base here which is available at a relatively competitive cost.”
In his career working for multinationals in Africa, Clarke says the thing he admires most about Africa is the optimism.
“People get up every morning, clearly determined and committed to the fact that they will succeed and I think that is incredible. Unless you see it, then you don’t appreciate. People here are genuinely optimistic,” says Clarke. “The thing that most impresses me are the kids here and how desperate they are to get to school, whereas in the UK kids are desperate to stay away from school. I think that is incredibly uplifting.”