Kwale miller eyes mass market with 500g sugar

The Kwale international sugar limited [KISCOL] factory. FILE PHOTO | NMG
The Kwale international sugar limited [KISCOL] factory. FILE PHOTO | NMG  

A Kwale-based sugar factory backed by Mauritian giant, Omnicane, has begun modifying its packaging line to pack smaller retail units beginning July, as the company eyes the mass market.

Kwale International Sugar Company Ltd (Kiscol), which currently sells in 50-kilogramme bags, says it is targeting the retail market by packaging the sweetener in smaller units of 1kg, 2kg and even 500g packets.

This is expected to raise competition in the retail space, dominated by a few millers based in western Kenya.

“We are currently working on modifying the line to pack in smaller retail units. When you start, it’s good to begin with big packages,” said Harshil Kotecha, director of projects at Kiscol.

Mr Kotecha said the cost of the adjustments will be known once installation is complete.

Omnicane, Mauritius’s largest sugar producer, owns a 25 per cent stake in Kiscol. Its impending entry into the retail sugar market puts it in a head-to-head battle with rivals such as Mumias, Kabras, Nzoia, Sony. Also in contention is another Mauritian miller, Alteo-owned Transmara Sugar.

The manufacturer is located at the collapsed Ramisi Sugar factory and began crushing cane in August 2015.

Kiscol is banking on the fact that sugarcane at the Coast takes 12 months to mature compared to 18 months in western Kenya to take on its competitors and cash in on Kenya’s perennial sugar shortages.

In the year to December 2015, Kiscol crushed 260,000 tonnes of cane and produced 18,530 tonnes of sugar.

Kiscol’s revenue for the year 2015 amounted to $12.45 million (Sh1.245 billion), according to Omnicane’s latest annual report. Kiscol recorded a loss of 57.546 million Mauritian rupees (Sh169.6 million) in the year under review.

The entry of the firm into the retail market space will come months before the Common Market for Eastern and Southern Africa (Comesa) quantitative protection for the Kenya sugar industry lapses in February next year.

However, the protection currently restricting duty-free sugar imports to 300,000 from the Comesa free trade has been renewed every other year since it was put in place 2001.

The opening of the market will spell doom for inefficient players especially the government propped millers in western Kenya.