Entrepreneurship Zone: 27 September 2021 :: Uganda: Entrepreneur builds brand of drinks made from the hibiscus plant

Mon Sep 27 09:04:09 CAT 2021

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Entrepreneurship Zone: 27 September  2021 :: Uganda: Entrepreneur builds brand of drinks made from the hibiscus plant

 <http://www.zitf.co.zw/> 

When Regina Nakayenga started to experience hot flushes as she went through menopause, a friend recommended that taking hibiscus products would help. At the time, Nakayenga, an enthusiastic farmer, had been growing passion fruit to sell in a concentrated form.

It had been her ambition to build a fruit processing company based on organic ingredients. However, she soon realised that without preservatives, the passion fruit concentrate would last only around three months before it turned bad.

Not wanting to use artificial additives, she began searching for another ingredient to base her business on. When her symptoms improved after taking hibiscus, the Ugandan entrepreneur decided to experiment with the hibiscus plant.

Setting up Rena Beverage Solutions in 2010, hibiscus-based products are now the mainstay of her Ugandan drinks business. “They have become our cash cow. We have hibiscus juice, hibiscus powder and hibiscus wine. It is really selling,” says Nakayenga.

Targeting the health-conscious market

The success of the hibiscus-bassed products is due to growing demand for health and wellness goods in Uganda, Nakayenga says. The businesswoman describes how she initially gave the powder to her mother who suffers from high blood pressure and to female students in schools who get menstrual cramps.

The market has since expanded to include supermarkets, health centres, pharmacies and several restaurants. Uganda’s moderate expatriate population is also a key demographic.

The growth in demand is reflected in sizeable gains in revenue over the past years. Rena Beverage Solutions – which also sells okra coffee, rosemary powder and wild palm seed coffee – struggled to make sales during the first few months of operation. Nakayenga reveals the company now generates revenue of around $7,000 each month from the range of products.

Sourcing raw materials from smallholder farmers

With sales improving over the past decade, the company has had to ensure it can keep up with the demand. Over 400 Ugandan smallholders supply it with hibiscus calyces to be processed in the factory. “Some of them have plots of five to 10 acres but others grow quarter to half an acre,” she says.

Dried hibiscus calyces.

A key value proposition for the brand is the quality of ingredients. For this reason, Rena invests time and money to teach the smallholders how to grow the best crops. The farmers are provided with inputs to improve their yields and technology that helps remove the petals from the hibiscus seeds and dry the flowers. After the raw material has been sourced, it is transported to Rena’s processing plant where it is used as the basis for the various products.

The factory houses machines that grind hibiscus and rosemary into powder and was financed largely through internally generated revenues.

In 2019, the company won a $20,000 soft loan from the African Entrepreneurship Award at a repayment rate of 7%. The money was used to buy a hibiscus tea bag machine that has only just arrived in the capital city of Kampala owing to delays caused by Covid-19. This will help Rena Beverage Solutions double down on the gains made by its flagship hibiscus products.

New markets

Nakayenga sees considerable growth potential to expand sales both within other regions of Uganda and as exports to other countries. “We call it concentric expansion. We will focus on getting more of our products to schools, health centres and clinics. Supermarkets are also growing and growing,” she says.

Nakayenga adds that she is looking to set up export markets further afield, in the UK and Germany, by the end of the year.

Fiercely competitive industry

Headwinds in the domestic market include stiff competition from local and foreign brands. The managing director acknowledges several other Ugandan businesses produce hibiscus products, though with “slightly different market niches”. One even started to produce hibiscus wine and juice after Rena marketed its first alcoholic beverage and ready-to-drink juice.

Global brands like Pepsi and Coca-Cola are also serious competitors. “Many Ugandans have a mindset that local organisations cannot make high-quality products.” This makes it harder for local goods to sell when placed on the same shelf as international brands. Bottling in glass, which is often preferred by corporate customers, is much harder for domestic manufacturers because of the cost.

Local bottlenecks

Despite its success so far, the company faces bottlenecks common in many developing markets. One is the cost and regularity of electricity for the processing plant.

Another challenge is the shortage of decent packaging solutions in the local market. There is also the high cost of transportation and a lack of existing distributors.-Howwemadeitinafrica

Rena Beverage Solutions’ product range.

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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