Competitors fail to break Jesa’s Dairy’s stranglehold on milk consumers

September 7, 2018 in Business, Companies by Editor

September 07, 2018 – Busunju based Jesa Dairy continues to maintain its market hegemony despite the emergence of competitors. On supermarket shelves of Kampala, the products of the dairy processor that will mark 25 years in the business next year sell at a premium.

For example at retailer Shoprite’s outlets which offer the lowest price for fresh milk, a litre of Jesa fresh milk retails at UGX 2900. That compares with UGX 2600 charged for a similar quantity of Mega and Milkman fresh milk.

A litre of Brookside owned Fresh Dairy, goes UGX 2800 but only manages to sell if Jesa, Mega and Milkman are out of stock. Or if Fresh Dairy does what it is doing these days – offering a bonus of a 150gm cup of yogurt for each litre a shopper purchases.

When the nominal price for that yogurt is factored in, Fresh Dairy is the cheapest brand of milk at Shoprite outlets with a real cost of just UGX 1200 per litre.

Jesa’s position at the top is down to two major factors – a trusted product and brand neutrality. When the processor first came on the market, the state owned Fresh Dairy was rundown with on and off production. When the state finally sold the company to Sameer Agriculture in the early 2000’s for s symbolic $1, many Ugandans were convinced Sameer was simply a proxy for powerful local interests who were stripping former state enterprises. Also, Sameer failed to  build consumer trust as their milk often went stale even before shoppers got to their homes.

Matters were not helped when in 2014, Sameer sold the company to Brookside in breach of the divestiture agreement under which it took control of the operations.

Similar political baggage haunts Mega, owned Moses Byaruhanga, President Museveni’s Principal Private Secretary. Although he plays second fiddle to Jesa, Mr. Byaruhanga has largely managed to stave off political bias against his brand by producing good quality milk and keeping the retail price always UGX 300 below Jesa.

The latest victim of political baggage is Milkman, who despite a good product is suffering from goegraphical proximity to the First family. A new market entrant, Milkman located its processing plant  in Rushere, President Museveni’s home village. This has hurt their  performance so much that despite the lowest retail price of UGX 2600 for a litre, sales need to be boosted by a giveaway of a 400ml sachet of yogurt for every two litres bought.

Generally, prices for fresh milk remain high in Uganda because of sector bottlenecks. Daily farm gate production stands at about 7 million litres but only 33pc or 1,840 litres is processed. This includes value added products such condensed milk, yogurt, cooking fats and spreads. None of the 100 processing plants operates on a large scale and they compete mainly for the small market around greater Kampala and exports of condensed and powdered milk to Kenya, Rwanda, the DRC and South Sudan.