An attendant arranges packets of maize flour at a supermarket in Kenya. Unga Group Holdings Ltd is considering abandoning grain milling business for a general food company after more than 110 years of operations. PHOTO | FILE | NMG
Unga Group Holdings Ltd is considering abandoning grain milling business for a general food company after more than 110 years of operations.
The firm is grappling with falling revenues precipitated by rising competition in the milling business, falling demand for its products and the high cost of raw materials.
The regional flour miller, which is listed on the Nairobi Securities Exchange (NSE), revealed through its latest integrated report that it is working on a transition into a general food company to secure the future of the business.
“Looking ahead, we have observed changing consumer purchasing habits, particularly among younger consumers who prefer convenient, nutritious foods that are easy to prepare while also being health conscious,” said Joseph Choge, the Group’s managing director.
General food outfit
The group disclosed that a new product development team has been assembled to manage the firm’s transition from a milling outfit to a general food outfit.
According to the report, wheat and maize prices increased during the financial year ended June 30 as a result of poor harvest, weakened local currency and adverse fiscal measures imposed by some of the exporting countries.
In addition, depreciation of the shilling against the dollar impacted importation costs, leading to substantial forex losses.
According to the report, more than 50 new millers have joined the sector over the past two years, resulting in an intensely competitive environment.
“In addition, we continue to be affected by cheap poultry imports from the region and fish from Asia, resulting in condensed market for our animal nutrition products,” reads report.
Economy recovered
Last year, Kenya’s economy recovered from the crippling effects of the pandemic to expand by 7.5 percent compared with a contraction of 0.3 percent in 2020. The recovery was mainly driven by resumption of most economic activities after the lifting of the containment measures instituted in 2020 to curb the spread of the virus.
However, unfavourable weather conditions continued to constrain the growth of the agricultural sector, with production of maize declining by 12.8 percent to 36.7 million bags in 2021 from 42.1 million bags in 2020
Wheat production declined by 39.4 percent to 245,300 tonnes in 2021 from 405,000 tonnes in 2020 consequently increasing the amount of wheat imported by 6,400 tonnes to 1.89 million tonnes in 2021
Last year, Unga entered into an agreement to sell its bread making business to a logistics firm BigCold Kenya after branding the bakery business “unsustainable”.
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