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Marcopolis presents Kenya Report focused on topics such as investments, doing business, economy and regional integration, featuring interviews with Kenya's leaders. The sectors under review in this issue are agriculture, banking, energy, industry, telecom, IT, tourism, logistics and many more.
InterviewsMay 19, 2022
Manufacturing Sector in East Africa: Kunal Patel Presents Comply Industries and Ustawi Grain Millers
Kunal Patel, Head of Marketing at Comply Industries and Ustawi Grain Millers
- Written by Sandra Francisco
- Published: May 19, 2022
Interview with Kunal Patel, Head of Marketing at Comply Industries and Ustawi Grain Millers
What are the competitive advantages of Comply Industries?
Being the pioneers of particle board and MDF (medium-density fibreboard) furniture in East Africa, we have been established in Kenya for the last 25 years and our main competencies are the quality of our products. Earlier, the traditional style of making furniture was to use local or staple wood like cypress, pine, mahogany or teakwood. People like to change out their furniture every five or six years. If you make wooden furniture it lasts for maybe 10 to 15 years, so MDF and particle board give them the opportunity to change every four to five years to make it more affordable because it is one-third cheaper than actual wood. It is very user friendly and is very easy to manufacture. 90 percent of the raw materials for making the board is sourced locally because we have our own forest. We also do reforestation because we do not want to kill our raw materials, and at the same time, we do not want to kill the environment. Our advantage is we have had local wood for many, many years and it is a mature wood. We make sure it has the right moisture content before it is used for MDF and particle board. So we have gained a lot of knowledge through our many years of experience so as to make a perfect product. What is important is the quality of the boards and the fact that they are locally manufactured.
Who are your clients?
60 percent of our clients are traders and wholesalers who resell the product to the end-users. The remaining 30 percent are developers and big contractors who consume the product in big projects for apartments or township developments and things like that, and 10 percent are direct end-users who are walk-in customers.
Do you sell only in Kenya, or in the region?
80 percent of the products are sold in Kenya and the remainder are exported to East African countries like Tanzania, Uganda, Congo and Rwanda. Our major customers are in East Africa, we have not gone out of East Africa.
Are you looking for investors, technology exchanges or partnerships?
As far as our group is concerned, financially or investment wise we are very strong because we are not only in this sector. As Sarrai Group, we employ almost more than 24,000 people all around East Africa. Sarrai Group is a conglomerate of diverse and inter-related agro-manufacturing companies across East and Southern Africa. So far, there is no need to look for any investment from outside. Technology wise, we always keep adapting ourselves and look at what is going on. There are some technology requirements we adopt which reduce our costs and increase production levels. That is the only need we see for now.
What are your success stories?
One is our market share. We hold a market share of almost 70 percent as far as MDF and particle board is concerned within Kenya. Our achievement lies in our consistency. We retain the customers; we retain our clients. Our clients have been loyal to us for 20 to 25 years even after so much competition. If you are persistent, you will get it, but if you are consistent, you will keep it. You can get fast started with your marketing effort, but if you get a repeat order that is the actual success for the business.
What is your vision for the company in two or three years’ time?
As far as our group is concerned, financially or investment wise we are very strong because we are not only in this sector. As Sarrai Group, we employ almost more than 24,000 people all around East Africa.
Being a local manufacturing company in Kenya, I would tell our existing clients as well as new customers and others that we support local manufacturing. Our theme lies in ‘Buy Kenyan, Build Kenyan.’ We do not want money to go out. If you import more, your money will go out and your GDP will decrease. We are contributors to the GDP of Kenya, so we want money to stay within the boundaries of Kenya and that is how you will develop. We are generating employment; we are consuming local raw materials. Please do not base your buying decision only on the price of the product. You should know that eventually you are contributing something to this economy by buying Comply products. Eventually this will help the next generations because money is staying in Kenya. Look at the dollar. Two years ago, it was 93 and right now it is 115, so the Kenya shilling is depreciating. Increase exports, increase local consumption and reduce imports when it is locally available.
Let’s look at your newer company Ustawi Grain Millers, when was it set up?
It was established in August 2020 with an aim to be a prominent player in the market as far as wheat flour and maize flour is concerned. We launched our first product as an all-purpose flour, that is home baking flour, and the branding is called Umoja. This year we will also be launching maize flour, which can be used as a staple food in Kenya to make ugali. It is normally consumed in the households of local Kenyans. We will have two brands. One will be Wando, which will be a fiber brand, and the other will be Umoja, which will be the premier brand for maize.
You are a new player in this market, so do you want to be dominant?
Being part of a group which believes in the work culture of quality products, our aim is not to grab the entire market because it is predominantly driven by people who are more price conscious than quality conscious. We are aiming at people who are quality conscious and that is a kind of a niche market. Our market share is probably less, but the value of our products will be higher as far as quality is concerned.
In this niche market are you mainly in Kenya, or are you across the region?
Being a new brand, your distributors and retailers will be more localized in the beginning, so our strategy was to start van selling, or route selling, and we went directly to consumers in particular areas. We identified two or three distributors in each area and handed over our branding and distribution to them. We then motivate the distributors’ sales teams and that is how we are expanding.
Are you looking for any research and development, or partnerships for this business?
We don’t have a need for partnerships so far, but we may look for it in the future when we want to expand.
What are the major challenges for both Ustawi Grain Millers and Comply Industries?
With Ustawi Grain Millers, as the wheat is mainly imported from outside Kenya, from Russia, Canada or Australia, the world wheat price really effects the cost of imports. If it increases, our cost increases and at the same time the Kenyan shilling has depreciated so the import costs have become really high. That is one of the macroeconomic challenges we see. The second challenge for Ustawi is that certain competitors are confusing the market by putting low quality products in the market with good packaging. Although consumers come to know later on what that particular transition is, it confuses the market, and it happens often. But we are consistent. We will not produce inferior brands, and eventually people will come to know that if it is Umoja it has to be quality.
With Comply Industries, the challenge is the cheap imported MDF and particle boards from China. That is creating competition here, so we want the Kenya Association of Manufacturers to impose some restrictions on these cheap imports. The aim is to promote the local industry and niche marketing is becoming smaller. People have less buying power, so they are shifting more towards the price conscious market. They are buying products that are bad in quality. They are not getting value for money. Eventually it will be more costly to make furniture from those products and the shelf life will be one or two years because it will chip and break. We are giving the best value for money and the good thing is the money remains in the boundaries of Kenya, so why not support us?
Have you been recognized with any awards for your products?
One award which we got was Superbrands East Africa 2021-2023 for MDF and particle boards. We were the only ones to win the award. Getting an award is one thing, but if your consumers stick to you, that is the biggest award we would like to have. And that is a continuous process. Just because we have won one award, it does not mean that you are successful. That is our philosophy. We want to be consistent for our customers.
What is your inspiration? What drives you?
My philosophy is my own internal motivation and the way Sarrai Group gives me the exposure to implement strategies for marketing. They have given their trust to me. Although I proved my loyalty, they have made it possible for me to achieve my marketing strategies and that drives me more. It is a continuous process. They have confidence in me and that confidence from management is my biggest inspiration.
For more information, please visit: www.complykenya.com and https://ustawigrain.com.
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