Bidco starts construction of Sh4bn soda and juices plant

Bidco Africa has started construction of a Sh4 billion beverage plant in Thika whose planned commissioning mid next year could upset the industry’s domination by industry bigwigs Coca Cola and Del Monte.

The factory, which is being funded by the International Finance Corporation (IFC), includes a production and bottling facility for non-carbonated still drinks, carbonated soft drinks and water.

The upcoming soft drinks plant is part of a Sh20 billion expansion blueprint that will see Bidco go into other manufacturing streams as it seeks to grow its business four-fold from the present $500 million (Sh50.5 billion) annual turnover.

“The groundbreaking for the beverage factory happened in February but actual construction started early this month,” said Bidco chief executive Vimal Shah in an interview.

“We had hoped to that the plant would be operational by the end of this year but some regulatory hurdles have forced us to move that target to around June of next year.”

Bidco’s beverages factory will have two processing lines — each with a capacity to produce 24,000 bottles per hour, according to disclosures published by the IFC in 2014 when it was mulling giving the firm a loan for the project.

A separate plant will produce about 100 million plastic bottles per year.

The estimated annual production capacity of the soft drinks plant is 50 million litres to be split among the different product lines such as energy, sports drinks, and smoothies (with and without milk).

Other products will be carbonated soft drinks and non-carbonated still drinks such as iced tea, coffees and bottled water.

Bidco currently manufactures edible oils, cooking fats, soaps, baking powder, animal feeds and detergents.

The firm, which was founded in 1970 as a garments factory, controls more than 60 per cent of the cooking fat and 54 per cent of the cooking oil market in Kenya, according to research firm Consumer Insight.

Mr Shah is now ready to do battle with seasoned beverage manufacturers such as Coca Cola, East African Breweries Limited, Pepsi, and Del Monte who have over the years cemented their positions locally.

READ: Bidco prepares to fight Coca-Cola with Sh2bn plant

The company’s entry into the soft drinks market will also turn the firm into a competitor of local ready-to-drink juice makers like Kevian Kenya (of Peek n’ Peel and Afia brands) and water bottlers such as Crown Beverages (Keringet).

Bidco is seeking to expand its business dramatically by launching new brands in the fast-moving consumer goods space.

To fund this expansion, which includes the beverage plant, the family-owned business has secured Sh20 billion from the IFC money it hopes to use to grow its business fourfold in by 2021.

“The site on which the beverage factory is being built will be an industrial park comprising several manufacturing lines as well as distribution and warehousing facilities” said Mr Shah.

“We plan on having at least 10 plants on the site some of which will be manufacturing new commodities whose details we cannot disclose at the moment.”

During a Reuters Africa Investment Summit held two years ago, Mr Shah revealed that Bidco plans to diversify into food and hygiene products such as toothpaste.

As part of this expansion, Bidco will in June launch a new Sh2 billion detergents factory that will see the business start manufacturing its own products as opposed to outsourcing to a third party manufacturer.

The company has factories in neighbouring Uganda, Tanzania and Rwanda from where it exports its products to 14 African markets.