May 30, 2018
“My after work drink was ginger tea, but there were no ready-made options available. You had to boil the ginger and make the mix at home, a time-consuming process not available to everyone and also there was only one variety of tea in the market. I realized there was a gap in the market, and thus the idea of flavored teas was born,” says Mutahi who ventured into the business 20 years ago.
Melvin’s tea, the very first flavored tea company in Kenya was launched in 1995. It was not only her taste buds that led to the idea, Mutahi wanted to change the narrative of people going on coffee dates by popularizing tea dates through the provision of the commodity in a variety of forms. It was however not going to be an easy ride.
Because her business was capital intensive in terms of production and research, securing a loan from a commercial bank was difficult.
Mutahi funded the business by borrowing from friends and family. Melvins ginger tea and Melvins Premium tea were the first products in the market. Today, Melvins tea has an array of flavored, herbal and fruit infusions teas. And the ingredients are all 100 percent natural.
“Our customers are the youth, upmarket, mass-market, Horeca’s, tea enthusiasts and health concise people. They wanted something different from the usual plain teas thus the introduction of flavored teas to the market. We keep in touch with our customer thus we try and develop what they want.”
In a bid to stay competitive and promote Kenyan brands, most of the tea products have Swahili names like tangawizi- which means ginger in English. Mutahi says it gives Melvins the tea an edge in the market.
Kenya is the world’s leading exporter of black tea, making it a major foreign exchange earner. According to data compiled by the tea directorate, export earnings rose by eight percent in 2017. The east African country earned 129 billion shillings from tea sales in 2017, up from 120 billion shillings a year earlier.
This is thanks to steady tea prices at the international market that offset decline in production.
But producers of Kenya’s number one export earner complain about high taxes. For an example, 1 percent levy on tea sold at a weekly auction in the port city of Mombasa and a 16 percent value added tax on tea processed and consumed locally.
“Other challenges in the tea sector also include: weather/climate changes, price and exchange rate fluctuations, and high cost of production. Infrastructural and logistical issues are also key factors, including slow cargo turn-around time at the port of Mombasa,” says Mutahi.
Over reliance on traditional markets has also affected earnings’ growth. Tea exports to Kenya’s major markets dropped 30 per cent in January compared with the same period last year, highlighting the country’s overreliance on traditional buyers who account for over 88 percent of the total sales.
“There are several challenges in selling our products in East Africa such as the weak trend in the export price of tea. This export price problem is as a consequence of worldwide tea export increases, which have occurred more rapidly than world consumption. Over the last ten years, there has been a consistent surplus of tea supply into the world market; this has had the effect of depressing auction prices.”
Flora Mutahi, who is a firm believer in Michael Gruber’s quote of Work on your business not in your business, has her focus on trade agreements such as the Africa growth and opportunity act that gives duty free treatment to coffee, cut flowers, food ingredients and tea products exported by Sub-Saharan Africa countries to the United States. She also plans to tap into the continental free trade area to bolster sales in the African market.
“The tea market in Kenya is challenging but profitable. We are our own champions and we strive to create sustainable, long term relationships not just because it’s a smart financial practice, but because it’s the right thing to do.”
Mutahi doesn’t really have a favorite tea product, she likes them all and oscillates from one to another. For now, it is berry blast- let’s see how long that will last!
Picture courtesy of Lionesses of Africa