Entrepreneurship Zone: 12 August 2020: How Kenya's Flora Mutahi built a tea company from the ground up

Wed Aug 12 04:56:22 CAT 2020

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Entrepreneurship Zone: 12 August 2020: How Kenya’s Flora Mutahi built a tea
company from the ground up

 <mailto:info at bulls.co.zw> 

Flora Mutahi, CEO of Melvin Marsh International, grew up in a time when it
was frowned upon in Kenya to become an entrepreneur.

“In the ’90s, everyone thought you should choose a profession, like a doctor
or a nurse. Business was for those people unable to get careers,” she says.
“Nowadays, I spend a lot of my time telling young people it is fine to do
business as a first choice.”

Mutahi studied accounting simply because she was good at it and qualified as
an auditor. It was a job she had no passion for and she lasted just nine
months in her first role before quitting.

Her family was not happy when she broke the news but Mutahi persevered and
investigated different entrepreneurship options. Her initial product was
Kenya’s first free-flowing salt (with anti-caking additives) under the brand
name of Melvin Marsh International before adding flavoured and infused teas
under the Melvins Teas label to the inventory. Today, the company has 120
employees and its teas can be found in Kenya as well as in some regional and
global markets.

Learning on the job

Mutahi admits she lacked the required knowledge and skills when she first
started in business. Her attitude, however, was always that she would be
able to learn what was required.

To develop and commercialise the free-flowing salt, she partnered with a
lecturer at a local university. She relates that the only time she spent in
a lab was in school and suddenly, here she was learning about processing
salt.

Once the product was developed and she had decided on a name for the
company, a friend with a design background assisted in coming up with the
brand look. Some orders followed; one from a hotel which wanted 1,200 packs
of salt. “It sounded like a lot but really it wasn’t,” she recalls of that
first round of orders and salt’s narrow margins. “I was so green in
business. When I delivered the salt to the hotel, I thought I would get paid
the next day but it took them 90 days to pay.” Mutahi realised she needed
another product.

In the early ’90s, Kenya Tea Packers (Ketepa) had a monopoly on tea packing
(the process in which the blended tea is packed into tea bags) in the
country. In 1992, the market was liberalised, allowing other players to
operate. Mutahi saw this as an opportunity and a trip to Mombasa to meet
with players in the tea industry followed in 1994. “These men challenged me
and said: ‘You do not just wake up one morning and go against a monopoly.’”

It was good advice as she realised she needed to differentiate her product.
As a tea lover, she would often purchase fresh ginger to flavour her drink.
“I wondered how many other people were doing this,” she recalls. The idea
for Melvins ginger tea was born and it was back to the university lab to
develop the new product.

A bumpy road

Finance and experience were major obstacles in the early days.

Mutahi had taken out a loan from a savings and credit cooperative
organisation – called a Sacco loan in Kenya – but it was not enough. She
remembers approaching her family for support and initially being refused.

Mutahi then found an International Finance Corporation (IFC) fund that
syndicated loans through commercial banks by offering security for the loan
if the applicant provided half. Her mother, behind the backs of the other
family members, relented and provided the money. It was still not enough to
pay for everything that was needed.

“It wasn’t illegal to bounce cheques so I would hand them out with no idea
where the money was going to come from. Or I would collect only a portion of
the packaging material I had ordered from a factory so they would not
invoice me,” she laughs.

Fortunately, with its unique Melvins ginger tea, the company did not
struggle to get listings in the bigger supermarkets and business gradually
picked up. For two years, Melvins Teas sold only two tea products: the
ginger-flavoured tea and a premium tea.

During this time, Mutahi had to train herself to be a tea taster (something
that usually takes years at a registered tasting school) as she could not
afford the services of a professional. She went into the tasting room of
another tea-packing company for about three weeks to learn so that she would
be able to advise on the right blends for her products.

Weekends were spent driving across the country to find new retail outlets
and arranging marketing activations to promote the product.

In 1997, Melvins Tea urgently developed four more flavours to gain entry
into an export promotion programme offered by a British fund. Unfortunately,
says Mutahi, the programme failed because the group was taken to bulk tea
buyers in the UK while they were providing packed tea. “It was pitched
wrong.”

The new flavours, however, sold well in the local market and export was
placed on the back-burner for a while. It was only in 2004 that the company
sent its first consignment abroad, to the US. Other milestones include
exporting to Japan in 2006 and more flavours being added in 2010.

>From farm to teacup

Melvins Teas does not have its own tea farm. It procures tea from different
areas in the country and then contracts factories to process it. “We then
take our preferred blends to our factory for further processing.”

In an industry filled with competition, Melvins’ unique proposition is that
it is all-natural. “We mill our ingredients from scratch and work with
outgrowers for our flavours such as camomile and lemongrass; we don’t use
artificial preservatives or flavourants. Our expertise is in the blending
and the flavouring.”

Mutahi says there are over 300 registered packers of tea but only the first
10 on the list have meaningful volumes. Melvins Teas ranks itself third in
the Kenyan market.

The lack of value-addition in the country’s tea industry bothers Mutahi.
“About 95% of the tea grown here is sold and exported in bulk. My dream is
to see single-origin tea packed from Melvins in stores worldwide and our
journey has proudly began.”

The company recently began selling its products on its own website as well
as on third-party e-commerce platforms such as Jumia. Export markets now
include Rwanda and Melvin Marsh has its sights set on West Africa. There is
also interest from a company in the UK that wants to sell Melvins Teas to
the British market.

In addition, Mutahi believes the proposed African continental free-trade
zone will bring significant opportunity for Melvins Teas.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Old Mutual Zimbabwe

AGM

virtual

12  August 2020 | 3pm

CBZ

AGM

Virtual

14  August 2020 | 6pm

Lafarge

AGM

Virtual

18 August 2020  | 12pm

Companies under Cautionary

Bindura Nickel Corporation

Padenga Holdings

Delta Corporation

Meikles Limited

 <mailto:info at bulls.co.zw> 

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