Dip in purchasing power drives demand for milk dispensers
By Nicholas Waitathu | May 20th 2014
By Nicholas Waitathu
Kenya: The number of shoppers buying pasteurised milk from digitised dispensers in supermarkets has increased. This has seen savvy traders acquire milk dispensers from external markets, and seek approval from the Kenya Dairy Board (KDB), the dairy industry regulator, to sell treated raw milk.
Mr Geoffrey Gitonga, an entrepreneur in the sector, said there has been growing demand for pasteurised milk from the dispensers, particularly in urban areas.
“We have been installing machines at strategic locations in urban centres and shopping malls. In the last two years, we have installed more than 40 dispensers. We have partnered with supermarkets and other shopkeepers as the demand for sterilised milk picks up,” he said.
Mr Gitonga told Business Beat he shares the profits equally with supermarkets and retailers as he is protected from other expenses such as rent, water and electricity.
He said the demand for milk from the machines is being dictated by changing dynamics in the local market, including the need for quality milk, depressed purchasing power and a surging population.
The prices for processed milk have increased since the introduction of VAT last September, which has prompted consumers to turn to raw milk. Currently, a litre of raw milk in most estates costs between Sh50 and Sh55, while a litre of processed milk averages Sh85.
The dispensing machines are digitised and sell pasteurised milk, providing an avenue for customers to get farm fresh produce at an affordable rate.
“We are selling one litre at Sh65, but a consumer can get as little as 77ml at a cost of Sh5. All one needs to do is key in the amount they require, and the product is dispensed,” Gitonga, who procures his machines from Italy, said.
“We are giving consumers who frequent outlets in estates that sell raw milk that may not be inspected a safer choice.”
Almost half of the milk produced in Kenya is sold in the informal market raw, and in several instances, it is contaminated with other components such as wheat flour or vegetable fats, putting consumers’ health at risk.
Data from KDB indicates that the country produces five billion litres of milk annually, out of which 2.3 billion litres, or 46 per cent, are used at the household level, while 2.7 billion litres reach both local and regional markets. However, 2.2 billion litres of the 2.7 billion litres are sold in the informal market.
KDB Managing Director Machira Gichohi, though he could not confirm the exact number of licences issued to traders operating dispensing machines, said there has been a significant increase in approval requests.
“Over and above licensing other milk machines in the industry, we have approved a significant number of dispensers” he said when contacted.
KDB has been accused of poorly regulating the sector, and has fielded numerous consumer complaints over the prevalence of contaminated milk in the market.
“There is a lot of contaminated milk being sold in the local market, and especially in urban areas, under the watch of the dairy board. After licensing milk bars, they fail to monitor the sale of the milk, thus risking the lives of millions of Kenyans depending on raw milk,” said Ms Ann Mwangi of Nairobi’s Kawangware.
Boda boda, a growing source of income for many
- EABL hikes prices of popular brands but Keg lovers spared
MONEY & MARKET
- Accounts student weaves her way into making mats and mints money
By Peter Theuri
- CAK fines firms for collusion in Rerec tender bid
- Kenyans to pay higher bills for electricity
- Getting past the minefield that is crypto trading
MONEY & MARKET