How to Start a Milk and Dairy Products Business in Kenya.

Fresh milk, yogurt, mala milk, butter, and cheese. Who doesn’t love milk and its products?

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Most Kenyan homestead consumes milk or its products daily in one form or another. The Milk and dairy products business is therefore so relevant in the life of every Kenyan, translating to the evident growth and success of the business.

The milk dispensing business alone is one popular venture and among the most profitable businesses in Kenya in 2020.

Other milk products have also been incorporated in the milk dispensing business and being sold together. You can never go wrong with a milk and dairy products business, well located and branded.

What is it that you require to start your milk dispensing business today?

How much capital do you need and how much profits do you expect? What is the most suitable location for such a business? I think answering such questions would greatly increase your possibility of starting a milk and dairy products business.

 Which Location Would be Ideal to Start a Milk and Dairy Products Business in Kenya.

You want to locate your business where you will sell quickly, right? Then a location with a high potential of daily milk and milk product consumption will do.

People coming to buy milk and milk products may mean that they also came looking for other household items like sugar, bread, groceries, and the rest.

What that tells you is that a shopping center or major towns would form the best location for your milk and milk products business as opposed to a location so far from town.

A Street with so much foot and vehicular traffic is a suitable location.

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You are almost assured of walk-in customers and good branding and marketing will also bring customers from afar.

You can also partner with large enterprises like supermarkets and hotels where most people are likely to come looking for milk products. Alternatively, you can work independently. It all depends on your objectives.

Requirements to Start a Milk and Dairy Products Business in Kenya.

Here are all the requirements for starting a Milk and Dairy Products Business in Kenya.

  1. Identify a market gap – through your market research, identify the need for milk and milk products supply or you will get trapped in an overcrowded market and only make losses rather than the expected profits.
  2. Identify a milk supplier – you need reliable individuals or entities that can supply you milk and milk products at relatively cheap prices so you can sell at higher but fair prices to profit. Kenya Dairy Board (KBD) requires that milk be pasteurized before being dispensed and so you need suppliers for pasteurized milk or you can pasteurize it yourself. Confirm the prices during market research.
  3. Acquire premises – get a clean room along a busy street with foot and vehicular traffic. An area with not so many other milk dispensing businesses. Major towns may offer a room of this kind at about Ksh.10,000.
  4. Branding and Renovation – renovate the room by installing the necessary fittings like shelves, counter, and painting it as you prefer. Brand the outside so well also, so that it is clearly evident that a milk dispensing business operates there. All this work may cost you about Ksh.30,000.
  5. Acquire the major equipment – the milk dispenser (milk ATM). They come in various capacities like 150, 200, 300, 400, 500 and even 1,000 Litres and are refrigerated to keep milk fresh. They can dispense milk in units of 100 ml and can be coin or manually operated. Get a milk dispenser at about Ksh.250,000 – Ksh.300,000 from OLX, Jumia, Pigiame, and other major shopping outlets.
  6. Acquire a Pasteurizer – if you don’t intend to buy pasteurized milk, then get a pasteurizer at Ksh.200,000. Raw unpasteurized milk from farmers is way cheaper anyway.

7. Acquire the necessary regulation as follows:

  • County Council Single Business Permit – Ksh.5,000 – Ksh.10,000 per year depending on your county.
  • County Council Outdoor Advertising and Signage Permit – that is for some counties who may require you to pay for outdoor marketing if you will maybe use a signboard or banner to attract clients.
  • Kenya Dairy Board (KBD) permit.
  • Milk Transport Permit – this is if you transport the milk.
  • Staff Health certificate.
  1. Stock with milk and the other milk products you intend to sell. This may cost about Ksh.15,000 for milk (small dispenser of 150 liters) and some other milk products.
  2. Start your milk and milk products business:

  • Good customer service will help you retain customers.
  • Maintain high standards of hygiene to avoid milk contamination and health issues.
  • Maintain your milk dispenser well.
  • Always be around to assist customers who may not know how to operate the machine.
  • Always have coins in exchange for notes from customers who want to use coins on the machine.
  1. Market your milk and milk products business thoroughly both online and offline. You can have a website and Facebook and Instagram Pages to reach far clients and be ready to deliver milk to them if possible.

How much capital is needed to start this kind of business?

Let us see how much capital will be required for investment in this venture:

  • Premises – Ksh.20,000
  • Renovation and branding – Ksh.30,000
  • Milk dispenser – Ksh.250,000
  • Licensing – Ksh.20,000
  • Stock – Ksh.15,000
  • Marketing and other costs – Ksh.20,000

With Ksh.350,000 – Ksh.400,000, you will be ready to start your milk dispensing and milk products business.

Is this kind of business profitable?

Raw unpasteurized milk from farmers will cost you Ksh.35 per liter while pasteurized milk will cost you Ksh.50 per liter.

Let us see how profitable each category is.

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If you get unpasteurized milk at Ksh.35 per liter, you will need to acquire a dispenser at about Ksh.200,000. Sell each liter after pasteurization at Ksh.100. 

Assuming you manage to sell about 200 liters of milk a day, that will be Ksh.20,000 made.

Profits from this will be Ksh.13,000.

If you get pasteurized milk at Ksh.50 and sell each liter at the same Ksh.100; if you manage to sell 200 liters a day, then that will be Ksh.20,000 made.

The profit is Ksh.10,000.

Profitable, right?

However, patience is key in business – you may not begin by selling 200 liters the first day but you will get there.

You may sell a liter of milk between Ksh.100 – Ksh.150 depending on the prevailing market conditions. Other dairy products like yogurt, cheese, and butter are also bound to give you reasonable profits.


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

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