How contract manufacturing aided the growth of our young start-up
Joseph serves as the managing director of McDave factory while his wife, Joan, is the sales and marketing administration director. They have a home and personal care line called Zelia.
When Joseph Uimbia and his wife Joan Okonu decided to give self-employment a shot and invest in manufacturing in 2016, they knew they were taking a big gamble.
The aim was to produce their own brand of personal hygiene and homecare products.
Joseph, an engineer, had worked in production manufacturing of fast-moving consumer goods (FCCGs), while Joan had worked in the financial services sector for years.
Banking on their combined skills and experience amassed over many years, though a big step, they were confident that their business would be successful.
Besides, they had run a general trading company for six years, and had put aside significant savings to kick start their manufacturing company, McDave,
“Using our savings, we put up a small plant. We started by looking for the smallest go-down available in Industrial Area, (Nairobi) which would help us reduce our overheads,” says Joseph, adding,
“We did not start as a contract business, but soon after we set up, we were approached by Unilever with a contract business proposal which involved blending of chemicals, after they heard that we had set up a chemicals blending plant.”
Unilever, a multinational known for the production of popular homecare and personal hygiene products such as Omo and Geisha, wanted to contract the startup to manufacture some of its products.
Better deal
The offer was too sweet to turn their backs on, so they took it, essentially putting their dream of owning their own brand on hold.
After working with the company for about a year, Unilever returned with an even better deal, asking McDave to invest more and develop capabilities to enable them produce more of its brands, forcing the startup to move to a bigger space.
Workers at McDave factory in Industrial Area, Nairobi, which manufactures home and personal care products, among others.
The couple moved their business from the 3,600 square feet go-down to a new 7,500 square feet go-down in 2018 and started producing more brands for the client.
At the same time, they were also taking up more clients who approached them, wanting to have their products manufactured or get services such as packaging, date coding and banding.
By 2020, McDave had grown in production capacity from manufacturing 25 tons to 400 tons monthly, over 12 times in workforce from the initial four to 48 and over four times in space from the initial 3,600sqf to 15,000sqf.
Then the Covid-19 pandemic struck.
“In 2020 when Covid-19 started, there was a big shock on us because our growth and wellbeing as a contract manufacturer depended on how well Unilever and other clients we were serving were doing. If they suffered, we would also suffer, being at the back end,” says Joseph.
“We realised that though our business was doing well at that time, there was no telling what would happen as the pandemic continued, we therefore decided to diversify the business as a form of risk management and to grow the business.”
It is around this time that they started the Zelia line of products, which boasts six product lines: hand washing soap, multi purpose cleaner liquid, toilet detergents, sanitiser, dish washing paste and carpet shampoo liquid.
The couple say while they have enjoyed good business over the six years since they launched their manufacturing company, the Covid-19 pandemic opened their eyes on the need to diversify, as opposed to an almost full reliance on contract manufacturing whose success is directly tied to successes of their clients.
They are now using standards, skills and capacities they have built over the six years to produce their own brand, firmly believing that if they have been able to manufacture some of the most loved personal care and homecare brands in Kenya, Zelia should be the next big thing.
“We realised this was a dream we could achieve because we had gained capability after years of manufacturing diverse products, such as hand-washing detergents and sanitizers. We were therefore capable of producing our own brand, which recently become our main focus. We are going out there, we are selling this brand and look forward to growing,” offers Joan.
The business has invested in modern equipment to improve efficiency.
She explains that it took them two years of research and development to come up with their brand, adding that this was deliberate because when they start selling in supermarkets, they want the quality of their product to be at par with what the big market players are producing.
Commenting on the company’s capability to grow and sustain their own brand, Joan points out that working under the contract manufacturing model has built the company in production capacity, workforce and skillsets and offers them the financial muscle to launch a quality product.
Joseph observes that Kenya’s manufacturing sector urgently needs to adopt contract manufacturing to be competitive globally as opposed to having many manufacturers who are unable to produce globally competitive products or operate to their full potential, as is the case.
Compete globally
“Contract manufacturing makes sense for Kenya, and is therefore the way to go, this is the way to grow a manufacturing sector that can compete globally,” he stresses.
To remain sustainable, the business has also adopted the recycling of packaging equipment in its operations, partnering with other organisations keen on sustainability.
“We have embraced sustainable practices within our operations. We are big on recycling because we want to conserve the environment and encourage low usage of plastics,” says Joan.
The start-up also supports SMEs that want their products manufactured, easing conditions such as minimum orders in an effort to support local businesses.
