UGANDA – Pearl Dairy Farms, Uganda’s leading milk processor, has expanded out of the dairy space into the soft beverage sector with the launch of its newest addition to Lato product line – Lato Gluco Power-B.

The dairy company that has ventured into the soft beverage market explained that the energizing drink is fortified with Vitamin B, providing its customers with a more potent energy boost to power.

The energy drinks market in Uganda is set to grow by US$223 million during 2021-2027, growing at a compound annual growth rate (CAGR) of 9.1% during the forecast period, according to data and analytics company StrategyHelix.

The strong Ugandan demand–especially for energy drinks, which is the fastest-growing drink category, is getting a driving force from the majority population which is the young and growing urbanization.

The diversification into a new category is on the back of a US$35m investment loan from the International Finance Corporation (IFC) to enable it to acquire a dairy plant in Kenya as well as boost its own to boost production of powder milk.

According to a disclosure from the investment arm of the World Bank, the maker of Lato Milk has asked for a total of US$35m credit facility to support its ambitious expansion plans as well as enable it to refinance a commercial loan.

From the disclosure, US$21 million will be allocated to a capital expenditure program that “including the upgrade and capacity increase of the powder milk plant in Uganda and the acquisition of a packing plant in Kenya.”

At least US$14m will go to “refinancing of existing Standard Chartered Bank loan in Uganda”, according to IFC.

IFC, which is expected to decide on the loan request in May 2023, said the credit facility would “enable local value addition by a dairy company that is facing significant risks and shocks related to export bans, COVID-19, and drought.

In 2021, the dairy giant made headlines with several product launches, including the UHT whole milk under its brand name Lato, and Lato Creamer, a ready-to-use two-in-one product.

The company also expanded into the honey business through a US$2.7m investment in commercial honey production.

The move was in a bid to create an additional revenue stream, given the challenges that are facing the country’s milk sector of not accessing most East Africa Community markets.

Even though Kenya went ahead to allow imports from Uganda, some exporting companies have complained about a lack of access to the market due to the Kenyan government’s move to stop issuing permits.

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