Why manufacturing locally was the logical step for Kenyan entrepreneur
For over two decades, Kenyan entrepreneur Raj Malde ran a large distribution company supplying products of local and international manufacturers across Kenya. Although his company Mjengo Limited had grown from a small hardware shop to one of the country’s largest distributors, and was doing well, Malde felt he was missing out on bigger opportunities.
“Distribution has its own challenges and you are always at the mercy of manufacturers. You can put a lot of effort into growing their business, but have very little to show for yourself. You would have very low margins,” says Malde.
In 2007, during a business trip abroad, he noticed an opportunity to manufacture biscuits locally.
“During one of our tours overseas we visited a bakery producing biscuits for export into Africa. It made me wonder why African countries needed to import biscuits? When we returned and began surveying the market, it was found that quality was a major issue. And we realised there was an opportunity to go into the biscuit business,” he recalls.
Having also established his own Malbros Daawat rice brand, it seemed a sensible, logical next step. So he decided to build on his own experience in distribution and introduce new product lines. The outcome is that today Mjengo Limited is a leading manufacturer of biscuits in Kenya with a popular brand called NuVita. The company employs over 500 people and sells its products across East Africa.
But venturing into a business he had no experience in was no easy task.
“It wasn’t easy because when you want to manufacture quality, it is always an issue. We had no background in biscuits but decided to innovate, work with a strong team, do trials and invest in market surveys and marketing,” explains Malde.
“I think we put our hearts into the business. We did our homework properly and tried to deliver something better than anything already in the market.”
Setting up his rice brand at the start of the millennium was also not easy. Kenya is not self-sufficient in rice with the majority being imported. And Mjengo imports rice from Pakistan, which is then packaged and branded in Kenya.
The ‘three Ps’: product, pricing, packaging
Malde says manufacturing and brand ownership is his company’s core business, and is further looking to expand the product portfolio to tap into the growing consumer markets. He attributes the success of NuVita Biscuits, Daawat Rice, and Daawat Spaghetti and Pasta to quality, packaging, competitive pricing and product consistency.
The company has also utilised a strong retail network of wholesalers and small shop owners to take its NuVita Biscuits to low income earners and rural villages. And it has also launched a range of premium biscuits, mostly stocked in supermarkets, targeting high-end consumers.
Furthermore, Mjengo recently entered the snack category with the introduction of Tings Corn Puffs. Malde cites the growth of formal retail, an increase in consumer spending power and a growing customer appeal for strong brands for the increased opportunities in developing fast-moving consumer goods.
“People are motivated to try new products, different tastes, and they want variety,” he adds.
Locals can match multinationals
The entrepreneur admits he faced ups and downs in more than three decades in business. In his trading days for instance, Mjengo had “a lot of cash flow but it was mismanaged at times leading to losses”. But he has learned a lot since first venturing into business straight out of high school when he purchased a family-owned fuel station that was on the brink of collapse.
“Our success lies in the fact that we never looked at the profits of the business. We have been more focused on developing the products and becoming a people’s organisation rather than a profit-focused [one]. I believe in putting your heart into a product rather than just looking at profits,” continues Malde.
“And I have also always believed that risk provides the best opportunity.”
Despite entry of multinational manufacturers in Africa, he believes local players “are equally competitive”.
“I think entrepreneurs here are as good as those in Asia and Europe. Our Asian and European counterparts may be bigger in strength, but local manufacturers can match them on prices and have a deeper understanding of the market. So I definitely see long-term opportunities for locals to grow.”