Tiger Brands acquisition of Haco begins to pay off

South Africa’s Tiger Brands is leveraging on its acquisition of Haco Industries to market and distribute its range of food products in the region.

Tiger Brands announced yesterday that its turnover increased by eight per cent to an equivalent of Sh200 billion on the backdrop of good performance by Haco Industries which it uses to market food products manufactured in South Africa.

“Haco has performed well during the year under review and in addition made a good contribution to the distribution of Tiger Brands’ products in the East Africa region,” said company chairman Lex Van Vught.

Results released on Tuesday were published on the company’s web site.

In June 2008, Tiger Brands bought a 51 per cent stake in Haco Industries, a company which was wholly owned by local businessman Chris Kirubi.

The move gave the South African firm a direct route into Kenya’s consumer market.

Through the acquisition, Haco Industries got the chance to access Tiger Brands product portfolio.

Haco distributes Tiger’s food brands of tomato sauce, backed beans, pasta, juices chocolates and sweets.

Finished products

However, the company’s mode of operation in Kenya — exporting finished products which are sold through Kenya’s extensive consumer goods retail network — is hurting the local manufacturing sector which recorded low growth in 2008.

According to the Economic Survey 2009, growth in Kenya’s manufacturing sector is slowing down because of several challenges including the introduction of cheaply priced imported products.

The manufacturing sector registered a 3.8 per cent growth in 2008, the lowest in the last five years, compared to a 6.5 per cent growth registered in 2007.

Manufacturers say locally produced goods are highly priced because of the high cost of production as a result of high cost of electricity, water and insecurity.

Free movement

Tiger Brands’ entry into Kenya handed the South African company a tariff-free opportunity to trade in the east African region, which has a market of about 385 million people and has just signed a protocol for the free movement of goods, labour and capital across the borders of the five member states. 

Haco hopes to boost its capacity to produce similar products locally as a strategy to grow its market share and hit back at competition.

Haco distributes and manufactures products under license from America’s ET Browne Co and Alberto Culver, France Societe BIC and Britain’s Jeyes Plc.

Its product range include BIC ball pens and razors, household care products such as Sosoft, Jeyes Bloo, Ace Bleach and Ezie, and cosmetics such as Palmers, TCB and Motions.