OUR 20 YEARS JOURNEY TO A FOOD & BEVERAGE COMPANY
Capwell Industries Limited has grown its business since it entered the food industry by investing in a maize milling plant 20 years ago. With a new drive to be a food and beverage company, the company recently installed a new 250 tonnes per day wheat mill and has introduced Kenya’s first cereal beverage drink. We sat down with the company’s CEO Rajan Shah to hear about their journey and future plans.
Capwell Industries Ltd (CIL) is one of the most diversified food processing enterprises in Kenya. The company has been a trendsetter in the Kenyan market since it started out in 1999 as a maize miller and is setting its eyes on new products and new markets in the near future.
The family has roots in Kenya running back over 100 years, after the company founder’s family moved from India to Kenya in 1911. Dalichand Shah, who is the Chairman of the company, started his career in the industry in 1962 when he joined his brothers in the bakery industry where he remained until 1996 before starting the Capwell Group in 1999 which is headquartered in the industrial town of Thika, about 45 km from Nairobi.
CIL started off with maize milling in 1999, installing a 240 tonnes per day (TPD) plant to start off and four years down the line expanded the business into rice milling in 2003 and next were porridge flour and pulses product lines in 2007. “Over the years we have grown our capacity to nearly 400 tonnes per day (TPD) of installed maize milling capacity. Our milling capacity of rice is presently 100 TPD, for porridge flours is 60 TPD, while the pulses range has 100 TPD capacity,” Rajan Shah, the CEO explains.
The company operates two maize milling plants, a 270 TPD plant and a 120 TPD plant that was the acquisition from a neighboring miller. It has invested heavily in modern and technologically advanced milling systems and superior packaging machines for its products portfolio.
New technology wheat mill
In 2018, the firm that specializes in high quality flour, rice, pulses and porridges invested US$10 million in a wheat flour milling plant as part of its expansion strategy into the market. The new Alapala plant, equipped with pre-cleaning equipment and a storage silo with a capacity of 15,000 tonnes has a daily tonnage of 250 TPD.
“We are now 1 year in wheat milling; before we were contract manufacturing then selling under our brand. Wheat is the second most consumed staple in the country, hence it would have been unfair if it wasn’t part of our product portfolio, because we wanted a whole range of staples. It is a tough segment because of the excess capacity/overcapacity in the wheat milling industry. Demand is growing but not at the same rate as the capacity. One year on, we have introduced our wheat flour under the Soko brand and because we have a very strong brand promise under Soko, we will continue to fulfill that brand promise, a reason we are equally doing well with the Soko home baking flour,” Rajan speaks on their entry into wheat milling.
Rajan doesn’t really see their expansions in facility and product range as diversification but rather a horizontal integration of the company’s portfolio. “The objective of the company was to make sure that every meal that our consumers have has a component of Capwell products in it. When we started with maize meal, then rice and pulses, there was obviously a gap in that there were other staples that were not in there and it was a natural progression that we expand our portfolio to be present in all meals at the table,” he explains.
The firm has always taken a measured approach towards the integration and consolidation. Mr. Shah explains, “We are a risk-averse company. We don’t expand senselessly; we look at where we are, what the market needs are, what market potential exists and cautiously look at expanding. We also make sure that we are not over geared as a company to curb financial difficulties from overborrowing. Our strong team has contributed largely to this cautious approach towards building the business.”
“Innovation is one of our key values as a company and is one of our critical success factors,” says Rajan Shah. “Our focus on innovation is not only in terms of the product, but in terms of the people and processes as well. Our innovations have also enabled us to make our processes more efficient and to deliver better food safety, including improving testing methodologies that reduce aflatoxins and other contaminants,” the CEO added.
The company’s journey to an innovations leader has been instilled in the people in the organization by none other than the CEO himself. The Research & Development (R&D) Manager, Charity Magwenzi, who leads the company’s product and process innovation efforts credits the CEO for the innovation focus that CIL has taken. “Our CEO is very hungry and restless. He is also brave and believes in the potential for innovation and its ability to enhance value and change the fortunes of the company. The path to an innovations mindset has been long and arduous. Companies that want to join this journey have to take a long-term view and be prepared to face failures on their innovations journey, even as success comes through some of the innovation activities will fall short,” she advices.
“I have looked at the food industry keenly and I have noted that there is a clear difference between companies that take the innovations journey and those that don’t, especially if you look at their progress over 10-20 years. Those that have the innovations mindset and take the innovations journey aggressively outgrow and out-compete those that fail to do so. Many companies take R&D to be a risky part of business and as a cost centre and not as an opportunity to grow the business. We have the right spirit here and the CEO is our biggest supporter and leader. Am very excited that we have this support from the leadership of the company and feel a great sense of responsibility due to the faith put on me and my team and the entire company for us to take on this important task, which is to accelerate the company’s growth through innovation.”
To facilitate the delivery of an agile and efficient innovations platform, the company has invested in a dedicated R&D facility, where product prototypes development will be carried out under the leadership of Charity. “The facility has a dedicated team of R&D professionals that I work with to deliver on our core mandates, which are in the areas of new products development, line extensions and quality improvements, and process and formulation changes to exiting products.” Charity adds that by having a dedicated R&D team away from the common practice of combining QA and R&D, CIL has managed to give the two roles the space they need to focus on delivering their specific mandates, where the QA department has taken its conformity roles with more focus and drive to deliver safe food and ensure the company conforms to customer and regulatory requirements.
Innovative products grow
Through some of the actions that CIL has initiated over the years after listening to the customer, they have continued to have a good standing with the customers who have been vital to the success they enjoy currently. In remaining on song with their innovations, the firm launched ‘Amaize’, a premium fine quality maize flour in 2018. The flour has a steadily growing presence and space in the Kenyan retail shelves.
“The reason why we got into Amaize was because we saw a gap in the market. We wanted to begin from a very clean slate, we didn’t want to copy a competitor. There was a market segment for premium finer quality flour, which was not quite being fulfilled,” justifies Rajan. “We invested in technology towards ensuring that we got the right product. For us it is a segment that is niche and not as big as the regular maize meal market. Nonetheless, there is a lot of positive feedback from consumers and the numbers can vindicate that and we’re positive it is a brand that is going to grow. Any brand we roll out, we always make sure that we give our full support and ensure that the consumer is getting a value preposition out of the brands.”
The latest buzz in the progressive firm’s innovation drive is ‘Yola’, a cereal beverage drink officially launched recently, making Kenya to join the cadre of African nations that have embraced these unique African drinks that are quite popular in the Southern African regions. This is the first time the company has ventured into a completely new beverage category and by so doing they have now become a fully-fledged food and beverage company, illustrating the company’s confidence in the Kenyan market.
The quarter of a billion-shilling new product category investment is a strategic growth move that the firm has taken to expand the line of products they offer in response to an evolving Kenyan food culture, according to the CEO.
Rajan had this to say on this latest introduction. “You could be wondering why we got into beverages. If you look at our vision and mission, we want to be the preferred food and beverage company. It is not by accident that we have come up with this product Yola. Two years of research and development have gone into developing this product through internal and external R&D, which involved the consumers to make sure we rolled out what the market is demanding. It is a very unique product; the first in the country.
“It is made from maize flour, cultured milk and other nutritious components, thus offering a nutrition, energy and affordability prepositions. Those are the three premises we wanted the lower end of the pyramid to enjoy. It is a meal on-the-go effectively. As we even anticipate that the product will take care of the lower end of the pyramid, it is interestingly appealing to the middle-pack of the pyramid and we are very excited and positive about this development.”
Charity informs us that the journey to delivering Yola has been a long one, with a lot of learning on the way. “Developing Yola has been the toughest challenge I have faced in my career. I have never created a totally new product category in a new market. It was really difficult to decide on basically all the aspects of the product, for example the level of acidity, thickness, sweetness and texture. It took us time to get a consensus on the final product we wanted to go with to the market, and we have made small, minor changes whenever we thought there was a need for it.”
She adds that there is a growing consumer base for Yola in the Kenyan market, and it can only get better. “In a market that was so much used to the yoghurt taste, our consumers expected Yola to taste like yoghurt and were not prepared for the new taste, but in any market you tend to have early adopters and those that take their time to adopt to new ideas.” She adds that the company has learnt to be patient since they are clearing virgin territory with this breakthrough product, which has been made to the specific requirements of the Kenyan consumer. “We realised that we have to be prepared for the journey and keep up with the customer to a stage that they will be comfortable with the idea of our product, and that time is ahead of us.”
She reveals that the new cereal beverage plant has the same technology as the biggest comparable businesses around Africa. She attributes this to the management’s focus on not compromising on the quality of equipment sourced for the plant, focus on food safety and in keeping the reputation of the company when making the investment decisions and in choosing the suppliers of the plant.
Quality and technology of the future
Despite operating in a market where quality issues are commonplace, CIL prides itself in investing in the best technology and to operate in efficient and safe plants.
John Bosco Muthama, the Quality Assurance Manager says that the company delivers the highest quality of products to its growing consumer base across the country. He says that they have invested heavily in laboratory testing equipment all the way from raw material testing, in-process testing and for end product testing before they release the products to the market. He adds that while they do not currently have quality issues with their wheat intake, quality issues related to aflatoxins are a big challenge, and can only be solved when all the stakeholders work together.
“Our concern is that at the end of the day, the consumer in Kenya still consumes the maize that we reject from our plant due to aflatoxin problems. When we reject maize consignments, the dealers simply go into the next miller to sell the non-conforming maize.”
Our quality department is very vibrant here; we believe that a strong QA department is the backbone to our company to deliver to the customers’ expectations. We also have young university graduates with fresh minds who are helping us in researching on new technologies emerging in the market so that we can adopt new ways of doing our quality and production management,” he adds.
Muthama, the Chief Miller, whose role is the day to day running of the mill and to ensure the end product is of high quality is full of praise for the new plant. The company has also installed 4 silos that enable it to mill adequate quantities of home baking flour according to the customer requirements, utilising a mix of imported and local wheat. Once milled, the flour is bagged through 2 Fawema packaging systems before being taken into the storage area awaiting dispatch to the market.
“This is a nice Turkish mill from Alapala. We have very good extraction rates of 78% and above and we produce regular wheat flour plus we have also commenced production of Atta flour. The plant is also very energy efficient and we are able to run the mill with a skeleton staff due to its high level of automation.” He has competent shift millers, electricians and mechanical fitters who are able to run the shifts on a day to day basis.
Expanding markets and products
The company has over the years managed to provide its products to the majority of locations in Kenya, with the product available in major supermarkets, medium level supermarkets and kiosks. With strong partnerships with leading distributors all over the country, the company appreciates the great contribution its distribution partners have played in its success.
The company’s products are also to be found in neighboring countries in East Africa, especially in certain outlets in Uganda and Rwanda even though trade barriers have hindered their penetration into some of the regional markets.
“Part of our strategy is to grow regionally into neighboring countries. Our rice used to go across the borders but because of tariff issues we are not able to export our rice into Uganda and Tanzania. The duty imposed made it uncompetitive. As a company, regional markets are part of our growth agenda; we want a presence in the regional markets as well,” says Rajan.
Capwell Industries is the leading producer of maize meal in the Central Kenya and Nairobi region. With their Soko brand having a strong lead in this particular region, driven by the focus on this area though the brand also has strong brand awareness across the country. This with the premium Amaize maize flour brand has given the firm a steady footprint in the Kenyan maize flour market.
In the rice product category, the company has a number of rice varieties and brands: Pearl Kenya Pishori Rice, the flagship Pishori brand, has gained over the years popularity in Kenyan homes, credited with delivering the brand promise and commanding a leadership position in the Pishori segment. The company is proud of its leadership position in the Pishori rice category in Kenya.
The company’s CIL Long Grain rice and the Ranee Family rice range (Ranee Premium Basmati, Ranee Classic, Ranee Chef Special Basmati, Ranee Every Day and Ranee Biryani Long Grain rice) offer great cooking presentation properties. The rice products are available in white and brown options, and various packaging sizes, from 1kg, 2kg, 5kg and 10kg offering choice and variety to consumers.
The company also has an extension line to spaghetti and pasta products under Ranee brand packaged in 400gram packs not forgetting a growing list of packaged pulses packaged in 500g and 1kg packs. These pulses include green grams, locally known as Ndengu, masoor dal (Kamande), cowpeas, black beans (Njahi), red beans, pigeon peas, popcorns among others under the Pearl Brand. During processing, the pulses are sorted and cleaned through the latest SORTEX technology that delivers clean, wholesome and nutritious grains that meet rising consumer needs in the region.
The porridge line consists of two varieties, Pure Wimbi and Wimbi Mix under the Soko brand name, offering wholesome nutrition & goodness to the whole family anytime.
Yola, that comes in four tantalizing flavors – vanilla, banana, strawberry and mango is targeted and suitable for the young and the old. “Yola cereal milk drink is a first-to-market, leading-edge trend to quench both hunger and thirst at the same time,” said Mr. Shah at its official launch recently. The drink comes in two sizes – the 250ml and 450ml that cost Kshs 40.00 and Kshs 60.00 respectively.
Buoyed by population expansion in the peri and urban areas, where a major portion of the firm’s growth came from, rising incomes and a more aware consumer, Mr. Shah believes this will continue to be the core market for Yola and spilling into rural areas due to its long shelf life.
Human capital focus
The company presently employs over 400 people, a feat that the company is very proud of, impacting a total of 2,000 people through its supply chain, from the farmers from whom it sources the raw materials to the factory employees, to those involved in the distribution of its products.
“Our Chairman, who has been working in the food industry since 1956, started the company and has been vital to its growth. Over the years, we have made great strides in growing the company, and are very proud of our most important asset: the people we work with here. However, we have recently made moves to professionalize the management of the company,” Mr. Shah informs us.
“We have a Head of Business and below there is the senior management team that heads various functions: Human Resources, Finance, Production & Manufacturing and Sales and Marketing. At the operational level, we have middle level, line management and supervisory staff. The team lead by Head of Business runs the operations and report to the executive Board, improving the management strength of the company.”
Mr Shah believes the R&D function creates a platform where innovation flourishes in the organization. They do take up university graduates who come and take internship programs and can hone their skills through their R&D. They absorb some of them as full employees.
“We are among the few in the industry to have a fully-fledged R&D function which we have taken as a core function. If you look at the core values of our company, innovation is one of them. It is important because the world over the pace of technology change is fast; the evolution of the digital era is rapid. This means you’ve to be apace with emerging trends to manage consumer expectations.”
The CEO says that they are looking at opportunities to train the under-privileged members of the society to find jobs. Further, they are looking at working together with other partners to start an apprentice program that will enable new employees to improve their skills, sorting out the mismatch of skill sets in the industry.
The future and changing consumer needs
“Disruptions globally, with the internet and information at people’s fingertips means consumers are more knowledgeable. They have better understanding and higher expectations. The regulatory environment is trying to catch up with these expectations. There are a lot of changes in regulations. Look at the plastic ban and fortification in flours. These are challenges that have impacted our industry,” offers Mr. Shah.
“However, we have embraced the challenges positively. Food safety has become a very important thing – climate change has had a huge bearing on the issues around aflatoxins. As a company we have become more vigilant, we have invested in more testing internally to make sure we are securing the right quality raw materials to produce the right food products that are safe to the consumer. We are HACCP compliant and are moving towards ISO 22000 certification.”
The company is looking up to a bright future. “We are excited for the future, but we also cognizant of the fact that the consumers are more knowledgeable and asking for more. The consumers are asking more of manufacturers like us in terms of better, more convenient, safer, nutritious and healthier products. Of importance is that we need to be of a certain critical mass to list the company,” he says.
The company, in line with its mission and vision, will continue to deliver wholesome, nutritious and convenient products. “We are looking at further value addition of our raw materials, where our present products serve as raw materials for extra value addition, by using better technologies to deliver better value to our customers. All our questions of the future will be answered by how the consumer needs will be addressed. Vitality, health and time are of essence to every consumer.”
Capwell Industries is planning to be in the business for many more years to come and is willing to work with other stakeholders to improve the local community and the country, beyond meeting its corporate goals, concluded the CEO.