PE firm DOB Equity tops up investment in Tanzanian dairy firm Tanga Fresh

TANZANIA – Tanga Fresh, a dairy processor in Tanzania has acquired additional investment from Dutch family-backed impact investor DOB Equity, to expand its production in the long-life milk market.

DOB Equity’s investment will also allow the dairy processor to expand its overall production capacity, providing access to a fair and reliable market for dairy farmers in the Tanga region.

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Founded in 1996 in Northern coast of Tanzania, Tanga Fresh’s partnership with DOB Equity began in 2007.

The dairy processor produces a wide range of products such as mtindi (sour milk), yoghurt, ghee, fresh and long-life milk.

Its production facilities have expanded significantly in recent years, from initially producing 15,000 litres of milk per day to today making 80,000 litres per day in a modern high-quality plant, indicates Africa Global Funds.

There has been an increasing trend of East African consumers moving from fresh milk to long-life milk, presenting a potential for market growth, in DOB’s view.

DOB explains that it invested in Tanga Fresh both because of its growth potential and because Tanga Fresh is committed to providing a reliable market and fair pricing to small dairy farmers in the region.

“Less than 7 per cent of milk in Tanzania is processed, leaving a lot of room for growth in the market, said Toine Huijbers, CFO at DOB.

“We expect to see increasing demand for higher-quality processed milk in the market.

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“It’s likely this will be largely driven by regulation and consumer awareness around the risks of drinking unsafe, contaminated milk and Tanga Fresh is well positioned to meet this rising demand,” added Huijbers.

One of the key issues hampering growth in the East African dairy sector is the supply and quality of milk from farmers.

To address this problem, Tanga Fresh has partnered with Solidaridad, an international civil society organization.

The partnership with Solidaridad will enable Tanga Fresh to provide services and support to 6,000 farmers with the goal of improving quality, yields and sustainability throughout the supply chain.

Frederik Claasen, Head of Policy at Solidaridad, said, “We provide impact investors with practical solutions to create a meaningful impact.

“We believe our work in strengthening the supply chain complements DOB’s investment for the benefit of the market and Tanzanian people.”

Tanga Fresh has recently welcomed Innocent Mushi as CEO.

Mushi has senior management experience with some of East Africa’s leading telecoms providers, as well as FMCG experience from Coca-Cola, where he started his career.

Mushi said, “The investment from DOB strengthens our working capital flows and production capacity. This will be key in supporting Tanga Fresh’s innovation and increasing its national market penetration.”

“The development of Tanga Fresh will also be helped along by our collaboration with Solidaridad, which will provide farmers in the region with the capacity to supply the volumes of higher quality milk needed in a growing market.”

In the dairy sector, DOB Equity has also invested in Countryside Dairy, a Kenyan dairy processor in Nyahururu.

Late last year, the impact investment firm invested in Natural Extracts Industries (NEI), a natural vanilla flavour manufacturer, based in Moshi, Tanzania to grow its small-holder farmer network.

NEI sources green vanilla pods from small-holder farmers in Tanzania and skilfully manufactures them into unique premium quality vanilla products.

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