Haco sets up food processing plant to grow revenue
Haco food products. An influx of goods from Asia has eaten into the market share of established players. Photo/FREDRICK ONYANGO
Haco Tiger Brands (HTB) is entering the food manufacturing industry in Kenya in a move aimed at reducing reliance on home and beauty care products which face stiff competition from cheap imports and counterfeits.
The firm has been importing the products, including breakfast cereals, canned beans and pasta from its parent company, Tiger Brands, which is based in South Africa.
The Nairobi food plant — which will also manufacture bread and package rice — will strengthen its hand in the ongoing battle for control of the packaged food market pitting Haco against firms such as Nestle Foods Kenya, Proctor and Allan, Trufoods, and Mini bakeries.
“By manufacturing locally, we will save on 25 per cent duty that is levied on imports of fully finished goods,” said Mr Polycarp Igathe, the managing director of Haco Tiger Brands.
“We expect the prices of our food products will fall by a similar percentage, making them more competitive in market that is crowded.”
This is a signal that Haco is planning to set off a vicious price war at a time when its rivals in the food market such as Nestle Kenya are planning multi-billion shilling expansion plans to grow and defend their market shares.
The Sh1 billion food plant—which has so far consumed Sh400 million with a Sh600 million upgrade plan on the cards—marks the first major investment by the firm since South Africa’s Tiger Brand bought a 51 per cent stake in the firm from Mr Chris Kirubi in 2008.
Tiger Brands acquired the majority stake in Haco Industries as a springboard into the East Africa region while the Kenyan firm saw it as an opportunity to boost its capacity and brand portfolio.
Tiger Brands manufactures pharmaceuticals, hospital equipment, food, and personal and home care products.
The firm’s entry into the food market comes as an influx of home and personal care products from Asia eat into the market share of established players such as Haco and Reckitt Benckiser.
Reckitt Benckiser, which manufactures household cleaning agents such as Dettol, Jik and Harpic, closed shop last year and ceded production of its flagship brands to a local manufacturer — Orbit Chemical Industries Limited — citing difficult market conditions.
Cosmetics business
Haco’s cosmetics business and the its flagship Bic is also being ravaged by counterfeits at a time when demand is burdened by high inflation.
“We want to move beyond our traditional products and we will have food products for all the three meals,” Mr Igathe said.
Haco Tiger Brands incorporated the name of its parent company to its logo on Friday.
The firm distributes and manufactures products under licence from America’s ET Browne, Alberto Culver, France Societe BIC, and Britain’s Jeyes Plc.
