Miller says State blocked sale of Hostess flour

Listed miller Unga Group #ticker:UNGA lost its ‘Hostess’ maize flour brand's market niche after the government directed the firm to withdraw it from supermarket shelves following introduction of a maize subsidy that slashed the price of 2-kilogramme packets to Sh90.

The company revealed that its performance for the year to June 2018 took a hit after it was forced to pull its premium maize meal brand from supermarket shelves last year as the State sought to make the key food item more affordable amid soaring food prices.

While releasing its audited financial results for the period, Company Secretary Winniefred Jumba also indicated that all millers were directed to price their 2-kilogramme packets of flour at Sh90 without regard to branding.

“The company was not allowed to sell ‘Hostess’, its premium maize flour brand during the subsidy period leading to loss of loyal customers. Since our resumption of ‘Hostess’ sale, the uptake has been slow but positive progress to regain market presence has been made during the second half of the year,” said Ms Jumba.

At the time, ‘Hostess’ was retailing at Sh184 for a 2-kilogramme packet.

The speciality brand, popular among Kenya's middle class, was absent from retailers’ shelves for eight months up to December 2017 when the directive was lifted with increased maize harvests.

Unga Group returned to profitability in the financial year ended June 2018 after making a loss last year.

The miller’s net profit hit Sh783.2 million compared to a Sh7.04 million loss incurred in the same period last year.

The firm’s revenues rose by 2.3 per cent to stand at 19.98 billion.

Meanwhile, a survey within local retail shops indicate maize flour prices are slowly falling to between Sh80 to Sh90 despite the government’s directive that the maximum price for a 2-kilogramme packet of maize flour should be Sh75.