Sasini: A Top-Quality Producer of Tea and Coffee in Kenya by Martin Ochien’g

Interview with Martin Ochien’g, Group Managing Director of Sasini

What is your assessment of the sector in Kenya? What are the latest trends? Is the market competitive?

There are challenges that affect both our traditional sectors of tea and coffee. Kenya consistently produces the best quality tea in the global market. As a result of that, we jealously try to defend that position. But we have seen increased competition from neighboring countries in the region in terms of volumes and quality. Rwanda is now producing very good teas because of their topography and climate. Even though their volumes are still low, it is a threat to Kenyan tea. We have also seen increased competition from traditional tea growing areas in Asia. For coffee, on the other side, we suffer from a high cost of production. We are still very labor intensive. Source markets like those in South America, for example, that use mechanization to harvest, are able to produce coffee at lower rates than we can. So, our competitiveness gets compromised there. What helps us is that the quality of our coffee is still on top. As a result, we are able to counter some of those challenges.

What does Sasini do? What is your competitive advantage?

Staying relevant with our agricultural practice, maintaining top quality, and being able to access global markets are our key aspects. Being an export business, it is very important that what we produce is relevant to the customers that we are targeting.

We like to see ourselves as the top-quality producer. But top quality is only relevant if you are able to sell it in the market and fetch the prices that you want. Our biggest advantage is that we are local. We are fully Kenyan owned. We have the Kenyan fabric entrenched in what we do. We own our own land so we are able to have the flexibility to decide what we want to do with it, what crop to grow where, and if there is need for change, we can change easily. We have about 1,500 hectares for tea and about 1,200 hectares for coffee. That gives us about 50% of our requirement in both crops. We still go out and work with out growers in extension services to help us bulk up what we need for the balance of our requirement. Having land available to grow and go into new agricultural sectors is a big plus for Sasini and helps us a great deal.

What is the quality of your coffee?

Coffee comes in several grades. A top grade being AA, but the highest volume of coffee being sold from the Kenyan market is the AB grade which is the second grade. It has the best combination of quality and price attractiveness. As a result, that is an important part of our business. The bulk of our coffee is sold to the western market and follows what happens in the New York Commodities Exchange. That coffee is used for blending and is then packed into different brands and products by our customers. That quality has been top in Kenya ever since coffee was introduced here many decades ago. Sasini actually started as a coffee business over 60 years ago. We have endeavored to stay and retain that quality because it is very important to us that that attractiveness to the global market is maintained. We need to be a bit more versatile as an industry and as a company in looking at innovation, looking at new R&D, new cultivars, new ways of agronomy, new ways of planting especially with technology in mind that can help us to reduce our cost of production so that we can stay relevant in the global market.

Are you interested in attracting partners?

It is inevitable. It depends on which of the sectors we operate in. In tea, for example, we are working with partners to help reduce our cost of production through modern harvesting methods that are cheaper to harvest in terms of cost per kilo. We have been doing that for quite some time. The industry has been doing that for 20 years now and we are at the forefront.

What are the key aspects for a company like yours to be successful?

Staying relevant with our agricultural practice, maintaining top quality, and being able to access global markets are our key aspects. Being an export business, it is very important that what we produce is relevant to the customers that we are targeting. We listen to them. We talk to them frequently. Many of our products are used to blend because they are on the top end of the quality graph. It is important for us to keep delivering that quality so those that are using it for blending are getting the quality that they want. It is very critical for us that we run the company with regard to sustainability, giving back to the societies where we work, being able to take care of the environment through our alliance with the Rainforest Alliance, good agricultural and manufacturing practice, and good commercial practice as well to make sure that we are not destroying what we have today so that generations that come after us will find a sustainable business and industry to continue.

What are some of your CSR projects?

We have chosen education as our key focus area for CSR. Within our estates, we have built primary and secondary schools that we fund on our land and we work with the government to ensure that those schools are serving those communities to enhance education. Education is critical for us because it ensures that you continue to produce the skills needed by the country, the industry, and the company in the years to come. All our CSR efforts are driven towards education and we will continue those projects into the future.

What are the two other markets you are active in? Why did you decide to go that route?

The company’s interest has always been in tea and coffee, but we have also dabbled in other agriculture products in the past. In depends on what is relevant in the market, what is needed at a particular time, and whether we are able to respond to that need. Our venture into macadamia and avocado is driven by our need to diversify from tea and coffee. There is nothing wrong with tea and coffee but having all our eggs in those two baskets was a bit risky for us as a business. We looked back several years strategically to see what else we could do. We have land, we have the expertise to be a good agricultural business, and we have access to the global markets that buy agricultural products in bulk. So, at the time of that research, the consumption of fruits and nuts was on the increase and still is. We chose avocado and macadamia for several reasons. First is that Kenya is a very good producer of macadamia nuts and has been for a long time. The global demand for avocado was very relevant for us because we have the right growing conditions for avocado, probably one of the best in the world. We are still at the very early stages of developing that as an industry, but we believe that with the amount of work and investment that is being put into the agronomy side of that, we have the land, we have the weather if it continues to behave, and we will be a strong and relevant player in the global market.

Are you looking for investors?

We are not. We have remained truly Kenyan and very sustainable in driving our own business. We have invested very wisely over the years in the most relevant parts of the economy. Agriculture is the backbone of this country’s economy. We are very proud to be associated with that sector and to help contribute to that economy and to help the government drive the goals it has with that sector. We are also in a very lucky position that in over the many decades we have been in operation, we have grown a very good local resource of how to grow, produce, and export our produce. That has put us in a very strong position to be self-sustaining over many years to come. At this point, we are not looking for any external investment or assistance from that side.

What are some of your success stories?

I have not been here for very long so I might not have the corporate history to remember all the successes. But this has been a publicly listed company for a very long time. It has done very well on the Stock Exchange mainly because it has been identified as one of the premier tea and coffee producers in the country. The fact that we are able to do that and access the global markets as a locally owned business makes us very proud. One story that happened in the few months that I have been here is that we are in the process of offloading a large amount of our coffee to one of the world’s biggest coffee retailers, Starbucks. That makes us particularly proud. We have sold consistently to them in the past but associating ourselves with brands like that helps to bring us to the forefront as a company that is serious about the work that we do.

What do you want to achieve for the company in the medium term, three years’ time? What is your vision?

It is really critical for me, our Board, our employees, our customers, and all our stakeholders that these business entities that we have gone into recently, macadamia and avocado, are well-entrenched and that they are set up for success and sustainability. For me, that will be a key focus. While doing that, we still need to retain our focus on our base business. Tea and coffee remain what contributes today to our returns and also what helps us to meet our customers’ needs. While we are reliant on them, we want to make sure that we expand that basket by doing more things where we can transfer the technology and skills that we have developed over time with tea and coffee into these new agri areas. We want to maintain success on the traditional business lines but infuse that energy and that success into these new business lines as well. The avocado market will not be satisfied by the current production we are seeing globally. There will be a lot of plantings in a lot of countries. It takes about three years for an avocado tree to start producing. We are going to expand the land that we have under our own crop and work with out growers to give us the quality that we want. Kenya is a big producer of the macadamia nut and the global demand is also increasing. It is important that we get to being a top producer in Kenya very quickly. Many other companies have been doing this for a long time. So, we have invested quite aggressively in those two sectors. We have built a top-class macadamia processing factory in one of our facilities. We are investing heavily in growing both macadamia and avocado where we have free land and where we think it will be better utilization of that land as opposed to what we are currently using it for.

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