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Unilever mulls new Sh13 billion factory

BUSINESS
By By WINSLEY MASESE | May 18th 2014 | 3 min read
By By WINSLEY MASESE | May 18th 2014
BUSINESS

By WINSLEY MASESE

Fast moving consumer goods (FMCG) maker, Unilever Ltd, says it will invest about Sh13 billion ($150 million) factory in Kenya to boost production capacity.

This will serve the fast growing East African region and other emerging markets. The investment, according to Unilever Executive Vice President East Africa and Emerging Markets, Marc Engel, is part of the company’s strategy to penetrate the regional market and harness untapped potential.

“This is by far the largest investment in Africa and is an indication of our commitment to Kenya and Africa. Besides, it is a clear indication that we are prepared for bigger business in the region,” he said.

Engel said the company is working hard to implement that plan, further cementing Kenya as a manufacturing hub in the region. The first products are expected to be out by 2016.  The company’s regional head argued: “We are planning to buy land soon and once it’s up and running, we will export some of the products to countries such as Malawi, Mozambique and Ethiopia, Uganda and Tanzania.” This will also create a market for raw materials for thousands of traders to supply vegetables, salt, sugar and packaging materials in the region.

“We will try to source local materials as much as we can. However, we will import actives and petrochemicals for detergents from the Middle East and palm oil from Indonesia and Malaysia,” he said. The investment, he said, will make a huge impact in the company’s portfolio of food and home care products. “Toothpaste usage in Kenya stands at an average 50 grammes per year, against the dentist recommendation of 700 grammes and once we develop the market, the growth potential is good.”

Low end market

In Tanzania the usage is 20 grammes and Uganda stands at 30 grammes. Only Nigeria has the highest usage of toothpaste at 100 grammes per year in Africa. Globally, Brazil leads at 550 grammes annually.  The same applies to margarine, and deodorants hence huge a growth potential for the company to tap into. “With this, you get a sense of what you can do to develop the market and that boils down to teaching people to use toothpaste thus we have an enormous opportunity,” Engel noted.  For example, the company holds market development such as campaigns on hand washing campaign and regular brushing of teeth to prevent germs and other infections.  “When you are teaching people on good hygiene, not only are you helping the society grow healthy but also developing a market to grow,” he reckoned.

With the economy growth promising, Engel projected a growth in the consumption of the company products. However, he said that they still manufacture products targeting the low end of the market. “We have small sachets of blue band, toothpaste as well as spices such as royco and rocyo cubes to reach down the low market segment by making sure that we have the low unit price,” he said.  However, it has initiatives that seek to improve people’s incomes to spare some for their products.

Part of these initiatives is to assist tea farmers where they operate such as in Kericho to get better tea and get better prices and thus bringing them to the zone to have the disposable income. “When people get above about $2 dollars a day, they will then get disposable income and we are trying to assist farmers get above that,” he said.  “Majority of Kenyans have grown up with our brands and our job is to make sure that when they buy it, they do not get disappointed and when you do that, people will come to us next time.” The company is also establishing a presence in some emerging markets such as in Ethiopia, Angola, Democratic Republic of Congo, and Central African Republic.

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