Proctor East Africa targets bigger breakfast stake with million-dollar factory
According to Proctor East Africa CEO David Kamau, the demand for convenient breakfast cereals and pre-cooked meals has been growing since Kenya’s upgrade to a middle-income status when the country rebased its economy in 2014.
This demand has attracted many multinationals such as Weetabix and Kellogg’s into the market and Proctor & Allan is hoping the extended plant will enable it to ward off growing competition and grow its share of the RTE cereals market.
Breaking the fast in Kenya
Kenya’s breakfast cereals market is still small and Euromonitor International reported RTE cereals accounted for less than 1% share of packaged food value sales in 2016.
However, there are a number of factors driving its growth including faster-paced lifestyles and office workers wanting more convenience, and a growing adoption of Western culture among Kenya’s middle-income groups.
Manufacturers have also responded to the trend by introducing smaller, more portable and convenient pack sizes.
Today, the market is estimated to be worth about Sh2bn ($19m), producing around 2,700 tons annually.
Increased capacity and employment
The Limuru factory – which produces breakfast cereals, oats and pre-cooked fortified flour – has increased its production capacity to seven tons per hour, and has created additional employment for around 200 workers.
“This investment has enabled us to start new product lines to provide consumers with a variety of products,” said Kamau, noting the company is also expanding its distribution both within Kenya and beyond.
Proctor East Africa has operations in Uganda, Tanzania and Rwanda, and is planning to enter Burundi and Ethiopia.
“We are also looking at deepening our presence in the countries we operate. We are currently in Dar es Salaam, Arusha and Moshi but we want to expand into Mwanza,” he said.
Locally, the company is recruiting wholesalers in rural areas to reach those consumers who do not live near the retail outlets that currently stock its products.
“With the expansion, we have an opportunity to get our products to shops to reach a lot more Kenyans.
“We also need to empower Kenyans who are entrepreneurs to make money by offering them the opportunity to sell our products,” he said.
Proctor & Allan is one of the oldest food processors in the region, founded in 1940s in Nakuru, then relocating to Nairobi.
Proctor & Allan East Africa Ltd was incorporated in 1999 after a group of local investors and The Acacia Fund acquired Proctor & Allan Ltd.
Kamau, former Haco Tiger Brands marketing director, was appointed CEO in 2015.
Kenyan breakfast cereal market
A number of global cereal giants are also angling for a stake in the ready-to-eat cereals market.
Kellogg’s entered the Kenyan market in 2015, with brands including Rice Krispies, Froot Loops, Coco Pops, Frosties and Pringles potato crisps.
Last year, South Africa’s Pioneer Foods Group gained entry through the acquisition of a 49.89% stake in Weetabix East Africa in a deal with UK’s Weetabix Food Company.
Catherine Mudachi at Weetabix East Africa said the company has seen double-digit growth year on year.
“The cereal market [in Kenya] is still small but obviously more people are changing their habits, and certainly there’s growth,” she said.
Euromonitor’s data shows Weetabix East Africa lead breakfast cereals in Kenya during 2016 with a value share of 46%, followed by Procter & Allan with 14%.
Nestlé Foods Kenya and Kellogg’s ranked in third and fourth positions, respectively, with their Cerevita and Kellogg’s brands, generating value shares of 11% and 9% during the year.