Ex-CEO who left corporate glamour for dairy sector cash cow

When George Chege Mwangi rose to be the chief executive of East African Cables at the age of 35, he promised himself to work for five years and then quit to set up his own venture.

He left the cable maker on September 30, 2015 after serving as CEO for seven years.

“I had said that this would be my last job. I wasn’t going to be a CEO or employee anywhere. I have always loved business and that is what I wanted to do,” Mr Mwangi told Enterprise in an interview.

Mr Mwangi, 43, has since set up Countryside Dairy, a milk processing firm based in Nyahururu, Nyandarua County. This marks a dramatic turn for a man whose entire working life was about cables and engineering. 

After securing a $2 million (Sh202 million) loan from a local bank, Mr Mwangi imported a dairy plant with a capacity to process 100,000 litres per day.

The cables man has now entered a multi-billion milk market dominated by big players such as Brookside, controlled by the Kenyatta family, State-owned New KCC and Githunguri Dairy Farmers Co-operative. Others are Meru Central Dairy, Kinangop Dairy, and Kabianga Dairy.

Mr Mwangi declined to disclose how much of his personal savings he injected into the business, only terming it as a “significant investment: “I remortgaged my house,” he said, adding that he sacrificed all he had to set up the milk plant.

The budding entrepreneur started with a shortlist of three possible ideas: a maize flour milling plant, a bakery, and a dairy firm. He struck off flour milling from the shortlist because the business is competitive and has high operating costs.

The bakery venture was likewise abandoned because Mr Mwangi felt the logistics of importing wheat would be a headache given that Kenyan farmers do not produce enough of the grain to meet demand.

He therefore settled on dairy because, in his assessment, there was ready supply of milk in his rural village of Kinamba, near Nyahururu. The neighbouring Nyandarua and Laikipia are awash with milk, he said.

“I was looking at value addition and empower the local farmers by proving a ready market for their milk,” says the businessman.

After sitting for his O-levels at Mwenje High School, Mr Mwangi proceeded to Strathmore College in 1994 where he began taking accounting courses. He became a CPA (K) holder in 1997.

He also holds a bachelor’s degree in finance from USIU-Africa and an MBA from Strathmore Business School.

His first job was at local audit firm Wachira Irungu & Associates where he worked for two years before joining East African Cables in February 1999 as a management accountant. He rose through the ranks to become chief finance officer in 2003 and was promoted in June 2008 to the corner office.

Mr Mwangi said he relied on his past entrepreneurial experiences in setting up the dairy plant.

During his days as a student at Strathmore, Mwangi farmed maize on a 20-acre piece of land back in the village. “Agriculture was lucrative those days,” he said, adding that he would harvest an average of 150 bags.

“I would make net earnings of Sh50,000 after harvesting. This was extremely good money at the time.”

He quit maize farming in 2001 saying the venture had lost its lustre due to entry of brokers into the business and flooding of cheap imports in the Kenyan market.

Works on Countryside Dairy began early 2015, as Mr Mwangi prepared his exit from East African Cables. The plant was imported in February and set up started in June.
The dairy plant was commissioned in November 2015 with production proper starting a month later.

Starting off was not easy for the cables man. In the first months, the processor had to pour thousands of litres of milk down the drain after they procured more than they could handle.

“We hadn’t learnt to match demand and supply. We were overwhelmed. This was the biggest challenge,” he told Enterprise.

Countryside Dairy employs 102 workers and sources milk from 20,000 farmers who are organised in three farmers’ co-operatives namely Ol’Kalou Dairy, Miharati, and Umoja Dairy Co-operative Society.

The farmers earn between Sh36 and Sh37 per litre of milk delivered.

Mr Mwangi said the plant is currently operating at 30 per cent capacity, meaning Countryside Dairy is processing 30,000 litres of milk daily. It supplies retailers in Nairobi, Eldoret and Nakuru with pasteurized fresh milk in half-litre pouches retailing at Sh41.

The firm also sells milk to Naivas and Quick Mart which is then sold via milk dispensers commonly referred as ATMs. He also supplies hotels, schools and hospitals.

“Our target is the low-income market such as informal settlements,” he said.

Mr Mwangi disclosed that Countryside Dairy plans to roll out a milk vending programme aimed at these informal settlements by end of first quarter of this year.

“We plan to have yoghurt and mala by June,” he said.

Last month, he sold a stake in Countryside Dairy to Dutch PE firm DOB Equity for an undisclosed fee. Mr Mwangi remained tight-lipped on the details of the deal, declining to reveal the stake sold and how much he earned.

“With new partners on board, we plan to scale up production, and offer farmers sustainable prices,” he said.

He also wants to venture into long-life milk production in the future, but that will require a new plant.

Mr Mwangi said he is also working to address route to market challenges, to ensure the perishable product reaches consumers in good time and while fresh.