Well-paid executive quits job, buys Unilever juice brand, and starts own business
I looked at the value that I was building for other people and I realised I didn’t have shareholding of even 1%. I helped start the Del Monte business in Kenyafrom scratch. I had seen the business grow from zero to several million-dollar turnover per year and I had no share in the business. So I figured why not start building value for myself? I was leaving a $10,000 monthly salary to go work for less – but I knew I would own what I was going to build.
Why did you opt to buy a brand from Unilever rather than start your own?
When I was at Del Monte every time I did focus group interviews, consumers would often mention Tree Top. I started thinking about buying the brand and reintroducing it, but my employer wasn’t interested. So I decided to negotiate with Unilever on my own to acquire the trademark. I approached more than 10 financing institutions and eventually, after nearly two years, I raised over $2m for this business.
People were very sceptical, thinking consumers wouldn’t remember Tree Top or that tastes would have changed – but my research proved otherwise. Tree Top was pulled out of the market due to price controls imposed by the government in the 1990s. Another factor was the entry of Quencher (a popular local dilute-to-taste beverage brand) that came in several flavours and sizes, and was packaged in plastic bottles. At one time Tree Top was packaged in a glass bottle of 700ml and came in a single flavour (orange).
I found that almost two decades later, the brand was still familiar to many consumers and retailers. I found that Tree Top has a very high nostalgic value. People who drank it as children, today have their own families and the brand resonates with them. Beverages is all about brands – if I had the same product with the name ‘Bernard’s juice’ nobody would touch it.
There are many juice brands on the shelves in Kenya. Is there really room for all these products?
We have a production line that fills 2,000 bottles an hour but I estimate the market demand for Tree Top is actually 10,000 bottles per hour. We are only selling in Kenya now but we are getting inquiries for big volumes from Ugandaand Tanzania. We have made some changes to adapt to today’s consumer demands. We have both ready-to-drink and dilute-to-taste options, five different flavours, and a variety of packaging sizes.
Truth is, if you just launch one flavour or packaging size you get lost in the clutter because there are many juice brands in the Kenyan market. Even retailers will not take you seriously. We have tapped into both the modern and informal trade.
What are you learning about consumers?
Children are very influential. This is amazing because today’s children did not exist when Tree Top was initially available in the market. This is a very new brand to them and I think it’s our packaging that first appeals to children – then later they appreciate the taste. We are targeting upper-income consumers with the ready-to-drink option and reaching the mass audience with the dilute-to-taste option.
Describe the trends in the beverages category in Kenya?
It is growing by double digits. I think this is being driven by the middle class, population growth and a growing interest among consumers to be healthier. Right now our dilute-to-taste drinks sell in higher volumes compared to the pricier ready-to-drink juices. However, we are seeing the fastest growth in ready-to-drink juices and that’s where we think our future business lies. As consumers get more income they shift to juices made from fruit pulp.
I think the juice market will double in size in the next five years because, currently, there is very little innovation. We don’t have smoothies, we don’t have fortified juices that appeal to older generations [and] we need more fancy packaging. I get excited by the opportunities in the industry.
Tell us about some of the challenges you face?
The biggest challenge we face is working capital. I have a big demand from the market but I don’t have enough resources to satisfy that demand. There are also tax policies and requirements that really slow us down. I wish there were more measures to support new manufacturers. I buy about 70 drums of mango puree from the coast of Kenya every month, directly touching about 3,000 farmers – yet we have been manufacturing for just a year. Imagine the volumes we could be doing in 10 years.
How would you describe your transition from employment to running your own business?
It has been very challenging. I worked with a multinational where I only focused on one line of business. When you are an entrepreneur you have to think about everything – tax, human resources, financing, regulations.
There is also the pressure of moving from a multinational, where there is always enough money, to your own business where you are constantly struggling with finances. In the first six months, I remember I used to panic if I received a call from an angry supplier who had not been paid on time. But now I have developed a thick skin. It is important to be patient, learn to roll with the punches, and get a good team to work with you.
However, there are some benefits I have enjoyed because of my history working with multinationals in the beverages industry. I had built good networks, both local and international. For instance, I knew where to get raw materials and I had connections with distributors so I did not have to go to supermarkets and distributors to pitch [the product].
Source: How we made it in Africa