Haco turns to baby foods niche to boost revenues

Haco Industries has diversified into the baby food market to grow its profits as its beauty care products face stiff competition from cheap imports and counterfeits.

The firm is targeting middle-income earners with baby foods such as cereals, fruit juices and canned food imported through its parent firm Tiger Brands, which is based in South Africa.

The move will open a new battle front in the baby food market pitting the Haco against Nestle Foods Kenya, Proctor and Allan and Cow & Gate, a UK based firm.

It will also offer more choice to consumers whose busier lifestyle is creating demand for packed baby foods.

Data from Eurometer International — a global research firm — indicates that the baby food market has grown its annual revenues from Sh700 million in 2004 to Sh1.1 billion last year and is expected to rise further over the next five years.

This is the market that Haco is penetrating with the help of Tiger Brands.

The SA firm expects to use Haco as its launching pad into the Eastern African market in an effort to become Pan-african.

Haco said the entry into food products will improve margins and offer a wider choice of items as it starts to battle firms like Nestle Foods which controls 45 per cent of the baby food market through its flagship Cerelac brand.

“At the moment we will import the processed food and confectionary from South Africa, but we want to start producing these locally,” Haco managing director Polycarp Igathe told Business Daily in an earlier interview.

Betting on pricing

The firm is betting on pricing and knowledge of Kenya’s consumer market terrain to penetrate the niche.

But market observers reckon that Haco will not find it easy to crack a market with “strong brand loyalty” and the drive by health experts to push for fresh food over processed food.

The market is also considered too small for many players, opening the way for a pricing war.

“The specialised food segment is still very small and limited to a tiny segment of society,” said a research document from Tiger Brands.