Kenyan flowers taking on the world
10 February 2014, 14:32
Cape Town - Agri-Vie, the private equity fund focused on food and agribusiness investments in Sub-Saharan Africa, has announced a $5m investment into Kariki Group, a specialist Kenyan flower exporting business.
According to Dave Douglas, investment advisor of Agri-Vie, the fund was attracted to making this investment in Kariki because of its reputation as a high quality supplier, its world class operational facilities and because it is an efficient and well managed business.
"The horticultural industry in Kenya is a significant contributor to the national GDP. Kenya now has a 38% market share of the massive flower supply in Europe," said Douglas.
Because Kenya is on the Equator, there is no real change of season. There are also a high percentage of sunlight hours during the year. Kenya has capitalised on these climatic and geographic advantages.
Conversely, growers in Europe have to utilise artificial lighting and heating to extend their growing period, thereby adding substantially to their costs.
The flower industry in Kenya has grown progressively from modest beginnings in the mid-1980s.
Within twenty years it emerged as one of the world’s leading flower exporting nations.
Recognising the potential, the Kariki Group was founded in 2002 by brothers Richard and Andrew Fernandes.
This was at a stage when the European floriculture sector became less cost competitive and began shrinking.
The cut flower industry operates to highly sophisticated and effective standards, said Douglas.
Within two days of cut flowers being harvested in Kenya, they are available to be sold to the consumer in Europe, having been trimmed, packaged and airfreighted overnight from Nairobi to Holland.
From there approximately two thirds of the flowers are sold through the massive Dutch flower auction at Aalsmeer.
Thereafter they are re-shipped to the final destination in countries as diverse as Sweden, Russia, USA and Japan.
Kariki is one of the fastest growing cut flower businesses in Kenya, operating from four different sites, all at different altitudes in the highlands.
This allows for optimum growth of different varieties.
For example, roses grown at higher altitudes produce bigger heads and deeper rich colours.
"Kenya is able to meet the high quality criteria demanded by the world markets," said Douglas.
"Kariki’s focus on the production of niche categories of flowers under proprietary rights sets it further apart from its competition."
Agri-Vie’s investment will assist the company to expand further, as growth opportunities are significant.
The European market's demand is also growing in the Japanese, Middle-Eastern and Australasian markets.
"Additionally, there is much potential to widening the product range in order to satisfy market needs," said Douglas.
Kariki’s environmental impact is positive with all Kariki’s operational sites holding both GlobalGap and KFC Silver accreditations, said Richard Fernandes, co-founder of the business.
Flower waste in the packing process is composted and utilised to re-enrich the soil, while rain water is harvested and utilised to supplement irrigation needs.
In addition, each of Kariki’s 1 200 employees actively participate in improving efficiencies and quality standards.