Kenafric's Sh1bn Soda Plant Stirs Beverage Market
Posted on : Thursday , 24th December 2015
Sweets maker Kenafric Industries is set to diversify into the production of soda in a move that will intensify competition in the industry that is currently dominated by Coca-Cola and PepsiCo.
Kenafric plans to set up a Sh1 billion factory to manufacture sodas and ready-to-drink juices at its headquarters in Ruaraka, Nairobi, during the second half of next year.
About 30 per cent of the total cost of the investment will be debt while the balance is a mix of the company resources and equity from its shareholders.
The drinks will be packed in plastic bottles ranging between 150ml and 300ml as the company woos children and the youth.
"The use of plastic bottles will give us an edge as they will ensure that the product is cheaper at the end level.
We are targeting the market, mostly comprising of youth up to 25 years," said Mayur Shah, Kenafric's executive director and co-founder.
DIVERSIFICATION
Currently, Kenafric runs three arms: footwear, stationery and food.
The firm is the maker of food additive, Oyo, and confectionary, its flagship division for manufacturing sweets, chewing gums and powder juices.
It projects that diversification into the beverages market will earn between Sh3 billion and Sh5 billion a year in revenue.
Apart from Kenya, Kenafric will target the Common Market for Eastern and Southern Africa (Comesa) region to sell its non-alcoholic beverages.
Kenafric is entering the soda market at a time when the sector is attracting new entrants due to its lucrative earnings.
Last year, Nyeri-based Highlands Mineral Water Company announced that it had diversified into manufacturing soda shortly after Bidco and Kevian Kenya had made similar disclosures.
Highlands is the maker of club soda, which it packages in 300ml, 500ml and 1.25 litre plastic bottles.
Mid last year, Kevian entered the non-alcoholic malt drinks segment, previously dominated by Coca-Cola and East African Breweries.
Kenafric will make four brands of soda: cola, pineapple, pinacolada and strawberry.
The company says that the new manufacturing unit will offer employment for between 300 and 500 people.
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