Uganda’s leading milk processing company, Maziwa, is set to acquire Kenya’s Highland Creamers and Food Limited in a move that will strengthen its presence and competitiveness in the East African market.
Maziwa, which operates under the brand name Lato Milk, has applied to the regional competition watchdog, COMESA Competition Commission, to buy 100% of Highland Creamers and Food Limited, a Kisii-based company that produces Family milk and yogurt.
The value of the deal has not been disclosed, but Maziwa plans to use the acquisition to set up a manufacturing base in Kenya. This move will give it quicker access to the market as opposed to bringing in the products from Uganda.
Maziwa currently depends on Highland Creamers to help it sell its products in Western Kenya,where the Lato brand is popular.
It will also help Maziwa overcome the supply chain challenges that have sometimes seen the Lato brand denied access to the country, escalating into a trade dispute between Nairobi and Kampala.
If successful, the acquisition will create more employment opportunities and enhance the quality and variety of dairy products available in the Kenyan market.
Lato Milk has invested heavily in research and development and has introduced innovative products such as lactose-free milk, flavored milk, and long-life milk, among others.
Maziwa is a subsidiary of Ugandan Pearl Dairy Farms Limited, a company owned by Midland Group. Pearl Dairy collects, processes, and sells milk and milk products in Uganda and exports to several countries in Africa, including Egypt, Tanzania, the DRC Congo, Zambia, Ethiopia, South Sudan, and Malawi.
In April, Pearl Dairy secured a $35 million loan from the International Finance Corporation, part of which was earmarked for upgrading its powder milk plant in Uganda and acquiring a packing plant in Kenya.
Highland Creamers was established in 2015 and is involved in the collection, processing, packaging, and selling of UHT long-life milk and yogurt in Kenya.
The company has a processing plant in Nyamira County and a distribution network in the western region. The deal with Maziwa comes months after Kenya opened doors for the Ugandan company to invest in local dairy factories.
In March, Pearl Dairy signed a deal with the state-owned financier Kenya Development Corporation to invest jointly in local dairy ventures.
According to the Kenya Dairy Board (KDB), Kenya has a large dairy sector with over two million small-scale farmers who own about 5.1 million dairy cows, producing around 5.2 billion liters of milk annually, which is worth more than Sh230 billion.
Last month, KDB launched a 10-year roadmap aiming to double the milk production per cow and boost the portion of formally marketed milk from 30% to 50% while adopting modern technology and climate-smart approaches.
Despite the progress made, the sector still faces challenges such as low productivity, high production costs, and competition from imports.
