Making your milk stand out from the crowd in a dairy market as developed as Kenya can be a difficult task. Every dairy aisle, from the large supermarkets to the smaller retailer in the neighborhoods, is awash with dairy options to choose from.
The milk and yogurt category are the most saturated with some dairy companies having more than 5 different brands in the same category. Standing out is therefore key to market success, and all processors know it. There is however only so much that an aggressive price strategy can do as other factors such as retailer rebates and profit margins limit how far you can go as a dairy processor.
How then do you survive in such a highly competitive market? Leading processors of premium dairy and food products, Bio Food Products Ltd has a simple answer: quality. For more than 3 decades, the company has fought off stiff competition from market leaders and created a name for itself as the purveyor of high-quality fresh milk, yogurts, and other dairy and food products.
A focus on quality, from the start
On a Swiss Air flight to Zurich from Nairobi, Bio Foods founder Zachariah Binoy had a chance to taste a very high-quality yogurt. It was like nothing he had ever drank in Kenya before and through the flight kept wondering why no such good quality yogurt existed in the Kenyan market, narrates Joachim Westerveld, Bio Food Products Executive Chairman.
On arrival, Binoy made it his duty to make high quality, healthy and best tasting yogurt for Kenyans, and that his how the Bio Food Products story started. The dairy company has since continued its founder’s legacy, making quality the cornerstone of every innovation. Over time, the market has come to appreciate its unique offering and Bio products today comfortably stand out in the dairy aisle for everyone choosing quality over price.
Getting it right, right from the farm
Nothing is as important to Bio as the quality of milk it receives from farmers. The company has thus gone to great lengths to ensure it meets European dairy standards. “The milk that goes into our factory determines the quality of our products,” says Westerveld. “You can’t undo quality issues on a product if the milk that comes in is of poor quality,” he adds.
To navigate this tricky part of the supply chain, Bio has built a partnership with farmers, investing heavily in extension services to ensure that the raw fresh milk that they receive is produced “the Bio way.”
“Any farmer who wants to supply Bio gets a visit from one of our dairy development officers who assesses the farm and then gives recommendations on things they need to improve on,” Westerveld reveals. During the farm visits, farmers are assessed on a number of factors including how they wash their milking equipment, if the dairy farm has enough water and air circulation, whether a milk cooling facility is on site, among other factors that impact on milk quality.
“Farmers who have achieved the right quality are subjected to an audit where they need to score 75% or above before we can collect their sample for testing,” Westerveld adds.
Bio works with a sizeable scale of farmers, but from all over the country” reveals Laban Kabiru, Bio Foods Manufacturing and Logistics Director. “We have limited farms because we have to maintain the quality that Bio is known for. It would be very difficult to monitor the levels of quality if we were dealing with small scale farms,” he adds.
Bio does not just leave the responsibility of quality milk production to farmers. “We have a robust dairy development program which we call “farming the bio way”. We don’t only buy just buy milk; we also carry dairy development training to help farmers improve on quality. We also carry out audits and share results with the farmers so that they improve on their dairy practices,” says Laban.
By partnering with farmers, Bio has been able to see quality of milk from individual farmers improve. “Working with the farmers we have seen a difference in hygiene and even in production per cow. What this means is that the farms working with us are more profitable compared to those with low productivity. Even the quality of milk has improved in terms of butter fat content and protein levels. Farmers in the end gain because the better the quality of milk the more the farmer earns.”
Once the milk is collected from a single farm it is received into a sealed compartment, separate from milk from other farmers, transported to the factory where it’s subjected to 18 quality tests which have to be passed before the milk is allowed into the factory. This allows Bio to continuously monitor the quality of milk it receives from farmers.
Delighting consumers with best tasting, cleanest, and healthy dairy products
From its high-quality milk, Bio produces premium food products to the delight of its customers. The company has a fresh milk line that is comprised of 4 different products namely fresh milk, barista milk, semi-skimmed milk, and fully skimmed milk. The company also has a long-life milk line that has both standard long-life milk and a lactose-free milk variant for the lactose-intolerant consumers.
Bio also produces an expansive range of yogurts that consumers can choose from. Standard premium yogurts are available in seven delicious flavours which include Vanilla, Peach, Nature plain, tropical mix, berry cocktail, mango, and strawberry. Bio’s yogurt range also includes Greek style yogurts, fruit on the bottom yogurts, and drinkable yogurts. The company also has a non-dairy yogurt made from coconut that took the market by storm when it launched last year.
Still in Dairy, Bio has a cheese line that produces both soft and hard cheeses. Its soft cheeses include Mozzarella, Paneer, and Halloumi while Gouda and Cheddar make up the company’s portfolio of hard cheeses. Within Bio, a non-dairy line exists that produces the company’s sauces, mayonnaises, jams and marmalades. These products trade under the Ma Cuisine brands and have been growing since they were incorporated into the Bio brand in 2020.
Staying ahead of the curve through continuous innovation
In dairy, just like in any CPG industry, companies that have thrived for decades have one thing in common, innovation. Without innovation, you risk losing relevance, and getting lost in the ever-crowded dairy aisle.
“Kenyans are really dynamic, they want excitement and the generations we are raising today are people who want to try the new and the unknown,” says Bio Foods Head of Research and Development (R&D), Keziah Gitau. To keep up with changing consumer demands, Bio has invested heavily in its R&D department.
“R&D is a very big thing in Bio,” says Gitau. “For the last four years I have been in this company, we have actually done quite a lot when it comes to R&D, from probiotic yogurt to Greek yogurt and even plant-based yogurt. One of the ways we identify the consumers’ needs is observing world trends, because one thing that you will notice is that we are always among the first companies in the region to do something that no one else has done so far.”
Observing the world trends is what led to the launch of Bio Greek Yogurt in 2019, a first in the Kenyan market at the time. “By the time we were getting the Greek yogurt out, we actually thought that it was new to Kenyans but it was really exciting that people knew about it. The consumers were only waiting for someone to finally make it – we do listen to our consumers” Gitau highlights.
As the world moves towards healthier and nutritious foods, Bio has not been left behind.
Led by the R&D department, the company has come with a number of products that are the first in Kenyan market. It’s recently launched plant-based yogurt is a great example of innovations around health and wellness.
“We realized we do have a segment outside there which cannot consume milk but was in need of the benefits of yoghurt cultures. Since in Kenya we have quite a lot of coconut especially in the coastal region, we decided to try it out. It was quite challenge to develop because the non-dairy segment is quite new but were able to come up with a product line that people like and we are elated with the good feedback we have received from customers.”
Sugar reduction is another world trend that Bio is focusing on to bring to the Kenyan market. Its focus on sugar reduction is purely on a health perspective, as high intake of the sweetener has been associated with lifestyle diseases such as diabetes and obesity. Progress in this front has however not been easy.
“Kenyans like sweet things. Trying to create a less sweet product in Kenya is one of the hardest things to do,” reveals Gitau. Not to be set back in its mission to nourish Kenyans with healthy dairy products, the company is currently focusing on educating people about the risks associated with high sugar intakes. “As much as we want to move with the pallets of our consumers, we want people to understand that sugar is related to many lifestyle diseases and it would be good for them to try this [products with low sugar] and taste how this feels,” she adds emphatically.
Gitau however reveals that when it comes to R&D, there is not surety of success. “It’s a hit or miss thing,” she confesses. Luckily for Bio, it has a diverse pool of talents that spans different races and genders, which Gitau believes, has been key to the successes it has got in bringing first to market products like Greek yogurt and plant-based yogurts.
Gitau also acknowledges existing support from its suppliers as another critical ingredient for its innovation success. Where the company has met challenges, the R&D team has not been shy to bring in outside support. The mission here is to “ensure that we delight our customers by giving them the best tasting, cleanest, and healthy dairy products and doing it in a sustainable way,” says Westerveld. And the company is always ready to go all the way.
Building a national brand
About 5years ago, Bio Foods was a small brand limited to a few affluent stores, the likes of Chandarana and Nakumatt – which has since gone under. In total, the company was only present in about 300 stores.
To build a brand with a national outlook, Bio has been working hard to put the Bio brand in as many hands as possible. That work has been mostly undertaken by a team of enterprising sales people currently led by Jennifer Mureithi, the Head of Retail Sales. Mureithi reveals to us the secret of retail success was to go mainstream and introduce products in all the big four supermarkets as well as the small retailers in estates.
Today, the Bio brand can be found sitting comfortably in aisles of all the major supermarkets including Naivas and Carrefour. Consumers in estates can also find their favorite yogurt or milk and now cheese in the retail shop close by. According to Mureithi, all a retailer needs to stock Bio products is a functional refrigerator that can maintain temperatures of at least 4-6°C. “Four to five years ago, Bio Foods was just a small brand that was not really known; we were mostly in Chandrana’s and Nakumatt’s but now if you go around even in your local supermarket, you will find either our long-life milk, our cheese or our recently introduced butter,” Mureithi reveals.
However, expanding into the other regular retail outlets has not been without its fair share of challenges. Lack of refrigeration facilities by many small-scale retailers was one of the greatest impediment to growth. To overcome this challenge, Mureithi tells us that Bio has begun providing refrigeration facilities to some promising retailers to enable them stock more of its products.
Mureithi further reveals that in product categories that are relatively new to the Kenyan market such as cheese, the company offers training on how these products are handled to ensure their quality is guaranteed. They also offer retailers tips on how to sell products that they are not familiar with, thus building up retailer confidence in the product, further extending the market presence of the Bio brand. The aim is to delight consumers with great tasting and healthy products, and with effective selling, Bio has been slowing getting there.
Currently, Mureithi reveals that the company is in over 750 stores nationwide, more than double the footprint it had five years ago. Having a bigger footprint, however, brings problems when it comes to payments for goods supplied. Mureithi notes that retailers wish to pay for product supplied after 60 or even 90 days which is a challenge as the same company has to pay its milk suppliers with 7 days and also pay salaries and other bills. At times the company has to tap into its cash reserves to keep business running. “If my customers are able to pay on time, then it would be really good for me,” she remarks.
Weathering the storms of a pandemic
Bio just like any other business was hit by the pandemic. As borders closed, Bio found itself at a greater disadvantage as supply of its imported raw materials was interrupted.
“It was hard to get the materials from abroad because there wasn’t enough shipping capacity,” reveals Bio Foods Managing Director Tom Jansen. To avert such a crisis from happening in future, the company has started to look for locally sourced alternatives to its imports. “We are reviewing what we can source locally,” reveals Jansen adding that such a move would create more businesses in the local economy.
Jansen also reveals that Bio also chose to invest more in its people during the pandemic to ensure operations ran smoothly at its facilities. The company enhanced sanitation and conducted a vaccination drive for all its staff to ensure that they were adequately protected from the virus and fit to carry out operations at the plant.
Sales were the other aspect of the business that took a major hit. “Covid came and our sales actually dipped by about 25%,” Mureithi reveals. This was mostly caused by closure of hotels and restaurants which were some of the company’s biggest clients. The company’s problems were further compounded by the winding down of some major retailers such as Nakumatt and Tuskys. Like many other suppliers, Bio lost millions of shillings in unsold or unpaid stock supplied.
With the HORECA business drying up, Jansen led his team elsewhere. In retail, the company found a lifeline. It significantly expanded its footprint and was able to make enough sales to offset the loss of trade in HORECA. “We didn’t do too bad during Covid,” Jansen said.
Producing healthy products, sustainably
Bio Foods invests in sustainability, “because it’s the right thing to do,” says Westerveld . The company, which is currently carbon neutral has invested heavily in renewable energies and other efficient energy technologies to be able to reach this far.
For instance, the roofing of the company’s factory in Nairobi’s industrial area is covered with solar panels. Laban Kabaru, Bio Food’s manufacturing and Logistics director puts into perspective the immense benefits that Bio has received from adopting solar power. “On a good day, Bio can run 95% of its operations on solar alone,” the Manufacturing Director reveals. Given the space constrains at the facility, Laban reveals to us that they can only use Solar during the day while Night operations rely on Grid power. But even with that, Solar has been incredibly useful in helping the company cut its electricity bill. According to Laban, on average, solar provides between 30% to 40% of the company’s total electricity consumption, a percentage that the company is quite satisfied with.
With solar in place, Laban now says Bio’s focus is on increased efficiency, that is where it sees potential for greater cost savings. To this end, the company has embarked on a project to replace all the lights at the facility with LED bulbs which consume 75% less power than their conventional alternatives. The company also recently took delivery of a new Boiler which Laban tells us has a better energy rating than what it currently uses. “Our new 4-tonne boiler is going to run on gas which will significantly cut the company’s CO2 generation. Unlike our current boiler which is 65% efficient, the new boiler will be about 85% efficient, which means we will use less energy to power the boiler and also significantly reducing the CO2 we release to the environment,” explains Laban. The company also has embarked on water recycling to reduce its overall water usage and the results have been tremendous. “We used to use 220 cubic meters of water per day, we have reduced that to 140. We have saved 80 and this is through recycling,” Laban reveals. To further increase efficiency, Laban tells us that the company has been driving training and awareness among employees in terms of reducing waste. “This has improved overall equipment efficiency, so instead of running for 10 hours you run for 8 hours. This saves money and energy,” he adds.
Bio has also tried to cut its packaging footprint by ensuring PET bottles used for its products are all made from recyclable material and are also fully recyclable, making it a more friendly consumer goods company than its competitors. Where Bio cannot avoid emissions, the company invests in carbon credits to offset what it emits to the environment. Investment in sustainability and carbon credits had the company, for the second year in a row, declared carbon neutral by one carbon world. “Bio, at this instance, is carbon neutral and every year we set a target for us to become more sustainable,” the Executive Chairman notes.
The desire to become even more sustainable has led Bio to venture into other areas uncommon in many parts of Africa. The company has for instance recently implemented a policy to give all its employees livable wages that can enable them lead sustainable and fulfilling lives. This is part of its goal to become a B Corporation certified company. Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. Achieving this certification will make the company part of The B Corp community which works toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high-quality jobs with dignity and purpose.
The company is also pushing the agenda further down the value chain and has committed to encouraging its partners including farmers to adopt sustainable practices in order to create a truly carbon neutral supply chain. It has also been actively encouraging consumers to support its sustainability initiatives by delivering their packaging back to their points of purchase for recycling. “We can make our packaging recyclable, but if the consumers do not bring the package back for recycling, then all our efforts go to waste,” Westerveld remarks.
Keeping the brand promise
Westerveld reveals to us that in the coming years, Bio will continue focusing on the dairy value chain as its core business. “At Bio our main aim is to ensure that we delight our customers by giving them the best tasting, cleanest, and healthy dairy products and doing it in a sustainable way, and I hope that in the coming years we can continue living up to the love that our customers are giving us and also hope that we can partner with our customers to become even more sustainable.”
This feature appeared in the Jan/Feb 2022 issue of Food Business Africa. You can read this and the entire magazine HERE