Lato mother company gets approval to acquire Kenyan milk firm

The Lato brand has previously faced various blockades in one of its key markets in Kenya. Photo / File    

What you need to know:

  • The Comesa Competition Commission says it approved Maziwa's purchase of a 100 percent interest in Highland Creamers & Food Limited, a Kenyan dairy company that owns the Family Milk 

Uganda’s milk processing company, Maziwa, which owns the Lato brand, has received approval from the Comesa Competition Commission to merge its assets with a Kenyan milk processing firm.

In a notice dated March 11, Comesa said it had approved Maziwa, the non-operating holding company incorporated in Mauritius, to purchase a 100 percent interest in Highland Creamers & Food Limited, a Kenyan dairy company that owns the Family Milk, noting that the merger would not raise any competition issues in the common market.

“The [Committee Responsible for Initial Determinations] determined that the merger is not likely to substantially prevent or lessen competition in the Common Market or a substantial part of it, nor will it be contrary to public interest,” the notice reads in part.  

Data from the Comesa Competition Commission indicates that Brookside Dairy holds the largest market share in the dairy industry, accounting for between 5 and 10 percent of the total 25 companies producing and selling dairy products in Kenya.

Only between 0.5 and 0.8 percent of the market is controlled by Highland Creamers & Food Limited, but this is expected to expand when combined with the 0.5 to 1.4 percent market share held by Maziwa.

Maziwa’s main line of business includes gathering, processing, and selling milk and milk products in Uganda, Egypt, Malawi and Kenya under the Lato brand. 

The company has been mainly selling its products, including ultra-high temperature milk (plain), UHT milk (flavoured), milk powder, butter, and yoghurt, through Highland Creamers & Food Limited. 

An application for the transaction was submitted to the Comesa Competition Commission in November 2023, which indicates that the two companies have individual assets or turnover, whichever is higher, exceeding $50m (Shs193.8b).

In Uganda, Maziwa operates Pearl Dairy Farms, a company that makes milk products marketed under Lato with overseas exports to Egypt, Kenya, Tanzania, and DR Congo. 

However, Pearl Dairy has had challenges with exporting its products to Kenya, thus searching for new markets in Zambia, Ethiopia, South Sudan, and Malawi.

The merger approval comes approximately a year after Kenya allowed Maziwa to invest in its regional dairy factories in March through an agreement that was approved by Kenya Development Corporation.

In April last year, data from the International Finance Corporation, a World Bank division that oversees private sector investments, revealed that Pearl Dairy had obtained a $35m loan to finance its expansion into Kenya and Uganda.