Kenyan businessman David Langat has made a bold move to expand his tea venture with an acquisition of one of the leading tea producers and trading company in Tanzania.
Mr Langat who owns Koisagat Tea Estate in Nandi County has bought three companies from British firm Rift Valley Corporation for an estimated price of Sh6 billion.
Through D L Koisagat, Mr Langat now owns 99 per cent stake in Mufindi Tea and Coffee Limited, Rift Valley Tea Solutions Limited and Kibena Tea Limited.
“It is true we have expanded DL Group operations into East Africa. That is all I can tell you for now,” he said.
Rift Valley Corporation owned the three companies as well as Luponde and Ikanga tea factories which were not cited as part of Mr Langat’s targeted companies by Fair Competition Commission of Tanzania.
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The expansion drive will see DL Group amass a production capacity of about 11,000 tonnes per year of made tea to become among leading tea producers in Africa.
If it acquires all the five new tea factories, DL Group will be strategically among the leading tea companies in Africa.
Eng Stephen Bett, DL Group CEO in Tanzania said the entry of D L Koisagat Tea Company Ltd in Tanzania is part of the DL Group’s long-term strategic plan to expand in Africa. DL Group has pledged to increase the prices of green tea which will be a boost to the farming community supported by the estates' spread across Tanzania.
The new company has also promised to boost production by enhancing supply of fertiliser to the farmers.
“This simple formula has resulted in growth of smallholder production in Rift Valley’s operational areas. Last year, smallholder purchases reached 3,000 tonnes of made tea, returning nearly $1.5 million to the local economy and representing close to 30 per cent of total company production,” the firm states on its website.
The entry of D L Koisagat Tea Company as a member of DL Group in the Tanzania tea auction is also expected to create excitement in the market. Tea is one of Tanzania’s major export crops and contributes about $30 million to the country’s export earnings and provides employment to thousands.
Tea is the fourth largest export crop and more than 30,000 smallholder farmers collectively produce a third of the country’s output.
However, the sector faces significant challenges. Research has identified a downward cycle within smallholder tea production – factories not getting enough green leaf throughput to operate efficiently.