Uganda-based Pearl Dairy Farms Limited is set to build a production and repackaging plant in Nairobi's Industrial Area as it moves to grow its market share in Kenya.
The company, the agricultural arm of the Midland Group, currently serves the local market with ghee, butter and milk powder imported from its Ugandan plant.
Pearl says initial estimates of the investment in the planned factory stands at about Sh100 million.
“We have for long been serving the Kenyan market from Uganda and our new factory will help in repackaging our products and subsequently set up a plant,” Atul Chaturvedi, the CEO of Pearl told Business Daily in an interview in Nairobi.
“The repackaging factory will be operational starting March next year while the manufacturing plant will follow as the sector has shown significant growth encouraging investments,” he added.
Mr Chaturvedi said the company has acquired a premises and is also in talks with the owner of another warehouse which it plans to lease.
The upcoming plant is meant to cut the costs of importing dairy products from Uganda besides making it easier and faster for the products to reach Pearl’s target customers in the local market.
Mr Chaturvedi said the new plant will be producing evaporated milk (milk with 60 per cent of water removed to boost its shelf life) including sweetened varieties.
Recent statistics from the East and Southern African Dairy Association shows that Kenya imports significant quantities of milk from Uganda to meet its deficit.
The report shows that Kenya bought milk worth Sh520 million from Uganda last year in what it attributed to high consumption of the commodity among Kenyans.
The milk imported from Uganda is mainly in powder form and is meant to plug the commodity’s deficit during dry seasons when local production falls.On its part, Kenya sold dairy products valued at Sh290 million to Uganda in the same period.
Pearl’s upcoming factory is set to expand its parent firm’s interests in Kenya and other African countries.
Dubai-based Midland Group is a conglomerate with interests spanning agribusiness, telecoms, forex, real estate, transport and education.
Its ventures include MiDCOM, Kenya’s pioneer Nokia distributor. Pearl’s expansion in the local dairy market comes at a time when the industry has witnessed increased competition, with some firms executing takeovers of rivals to build scale and market share.
Brookside, which is majority owned by the Kenyatta family, has become the largest dairy firm in the country after making several acquisitions including that of Buzeki Dairy.
Other major players are New Kenya Co-operative Creameries (KCC) and Githunguri Dairy, the producer of Fresha milk.
Africa’s richest man Aliko Dangote of Nigeria has announced plans to set up a factory in Kenya to produce dry milk for local and export markets.