December 19, 2016

Dutch private equity fund, DOB Equity, has made an undisclosed investment in Kenyan dairy processing company, Countryside Dairy, as part of the firm’s plan to increase its social impact investments in the country.

Launched in the town of Nyahururu in 2014, Countryside Dairy Ltd. processes approximately 100,000 liters of milk per day into pasteurized milk products for distribution to institutional customers such as hospitals, hotels, and schools as well as the lower-income market segment.

The injected capital will enable Countryside to scale up production and expand its geographic reach throughout the lower-income market.

‘DOB Equity’s investment has come at a critical growth stage for Countryside Dairy and will allow us to create innovative marketing concepts for dairy products aimed at the low income segment of the population, stressing that low-cost, high-quality milk plays an essential role as a key part of a healthy diet,” said Countryside Dairy Managing Director, George Mwangi.

This investment will also give DOB, which has offices in Kenya, Tanzania and the Netherlands, entry into Kenya’s Sh100 billion (US$980 million) dairy sector while expanding its regional portfolio which already includes Tanzanian dairy processor, Tanga Fresh.

Countryside currently collects raw milk from 20,000 smallholder dairy farmers in Nyandarua and Laikipia counties, distributing its flagship Countryside Dairy Fresh products to markets in Nairobi, Eldoret, and Nakuru. However, through its relationship with DOB, Countryside will gain access to world-class dairy processing technologies in the Netherlands enabling the business to modernize.

“Our latest deal in the East African dairy sector will allow Countryside Dairy to beef up its supply chain and offer better purchase prices to farmers while guaranteeing product traceability,” said Brigit van Dijk-van de Reijt, CEO of DOB Equity.

Kenya’s Potential

Although DOB’s investment in Countryside is being viewed by the firm as an impact investment that will increase the supply of dairy products to lower-income populations, the investment taps the firm into a sub-sector that has been attracting investors with its very high potential for growth.

Currently only 13 percent of Kenya’s milk products are formally traded, with the formal market still in a nascent stage valued at Sh57 billion (US$56 million). However, the industry is expected to double over the next ten years, potentially reaching a value of Sh280 billion (US2.7 billion) as urbanization and economic growth enable more Kenyan consumers to opt for branded and packaged dairy products over raw milk sold directly by farmers or middle men.

This potential has attracted billionaire investors to allocate capital investments within the sector including Nigeria’s richest man, Aliko Dangote, who announced plans to establish a powdered milk plant in the country, Deepak Kamani, the chairman of the Zuri Group conglomerate, who also plans to build a fresh and powdered milk plant in the same town where Countryside is located, and global dairy giant, Danone, which last year acquired a 40 percent stake in Kenya’s Brookside, the top dairy producer in East Africa owned by the Kenyatta family.

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Lynda Kiernan