For a long time, Agnes Irungu wanted to invest in the milling business. It is this desire that pushed her and her husband to frequent reputable milling companies as well as standards agencies such as the Kenya Bureau of Standards, KEBS, to find out what was required to run a milling business, their product of choice being maize flour.
Part of their due diligence process also involved looking for the ideal piece of land to set up their factory, preferably in an area near Nairobi, but one not too congested, a task that proved daunting.
“Getting land was a challenge, we needed space that was near Nairobi for convenience purposes, but at the same time, getting affordable land big enough to accommodate a factory and leave space for trailers delivering maize and loading of the finished product was difficult,” Agnes, who is the Managing Director of Giant Millers Limited told Powering SMEs.
Eventually, they found an appropriate place in Ngoingwa, Thika. Once they settled on the land, the couple then started on the process of seeking relevant approvals from KEBS, which took some time because the standards agency would subject the product, and the business, through very rigorous testing.
With everything eventually in place, they started setting up their factory in 2018. By the end of 2019, they had already installed milling machines, and by February 2020, they began production and packaging of their brand, Canna Maize Flour. Their biggest task now was getting the product to market.
“When you mill and package a product, you don’t know who is going to buy, and this can make you a bit nervous regardless of how much market research you have done,” she notes.
With their initial team of three, a commercial distribution manager and two sales representatives, they embarked on aggressive marketing of the flour around Thika area and other parts of Central Kenya.
Logistics was a challenge in the beginning because being new, they would only get small orders from different areas, orders that were far apart and therefore the value of the order would not meet the logistical expenses. They therefore also relied a lot on social media to do the marketing.
“Our strategy of getting to market was two way, we used supermarkets for visibility and the wholesalers for getting cash flow, 40 percent of our product went to the supermarkets and 60 percent to other wholesalers,” says Anthony Methu, the Head of Commercial and Distributorship at Giant Millers.
He adds that being a start-up, they had to sell most of their product on credit to popularise the brand.
“This business can be capital intensive, you give your flour on credit, supermarkets make up for nearly 40 percent of our total market share, and these will pay you after 30 days, but remember that you bought the maize in cash,” he noted.
This issue was compounded by the emergence of Covid-19 just when they were hitting the market. As a result of lockdowns, prices of raw materials skyrocketed, and they would purchase a bag of maize at no less than Sh3,500.
“Maize has become expensive. I can’t remember the last time I bought a bag for less than Sh2,600 since we started. Initially also, some maize suppliers would not deliver the quality of maize that we wanted, and it was very difficult to keep rejecting maize yet we really needed the stock,” says Agnes.
The business has since surmounted most of these challenges, and fast forward to 2021, from three sales agents, the company now employs 27 sales agents and a total of almost 60 other employees. “Getting the correct workforce can be a challenge, so we trained some of the people whom we had engaged at construction stage to run the factory. We have also trained some of the people who were doing loading and offloading of maize to do sales,” she explains.
They produce about 72 tons of maize flour a day, working on a 24-hour schedule, and plan to increase this to 144 tons a day by 2025 after adding another milling machine. They package their maize flour in different sizes, from half a kilogram upwards, depending on the order they get. The highest market price for a two-kilogram packet of maize is Sh126. The businesswoman says they would be interested in doing contract farming in future with local farmers to do away with the arduous search for suitable maize.
“We get a lot of our maize from Kitale, when it is exhausted there, you have to try find out where else you can get good maize, but some of these regions have aflatoxin, so we are not able to buy that maize for production,” she explains, adding that the company imports maize from Tanzania when there is a shortage in the market.
“The government needs to empower farmers to stop producing maize that has aflatoxin because at the end of the day, it is the farmers that are losing out because they can’t get good prices for that maize from anybody,” notes the entrepreneur. In future, the company plans to invest in the wheat milling business and production of corn oil, which is extracted from maize germ.