Highlands drinks: Building on home-grown brand for market edge – VIDEO – Business Daily
A worker inspects a soft drink line at Highlands Drinks in Nyeri on July 18, 2022. PHOTO | JOSEPH KANYI | NMG
Fourteen years ago, Joachim Westerveld, an angel investor from the Netherlands dreamt of owning a multibillion-shilling soft drink and water business in Kenya together with co-investors.
They were not treading the thin line between failure and success that is mostly associated with emerging entrepreneurs who are typically cash-strapped, and whose every boardroom decision stems from fears of not breaking even.
“Money was readily available and we were not investing in fear but risks. We wanted to build on the shoulders of the giants. We were looking for an established brand to improve on and serve the consumers,” the 46-year-old told the Enterprise at Shamba Café in Loresho, Nairobi when we sat down for an interview on a cold afternoon.
As Mr Westerveld and his co-investors were scouting for a possible buyout in Kenya, in Nyeri town in the Mount Kenya region, the family of Tribhovan Padia, the founder of the then Highlands Mineral Water Company, now Highlands Drinks, was looking for a strategic investor to pump in resources in exchange for a stake.
After many years of relying on Highlands Juice and Highland Water as their mainstay, the family wanted to diversify their revenue streams. Going into the soda market with their flagship brand ‘Club soda’ seemed like a surefire bet.
To Mr Westerveld and his associates, Highlands ticked everything they were looking for in their prospect. Their search came to an end when the Padia family allowed Mr Westerveld and his chain of equity investors to pump in an initial investment of Sh830.5 million ($7 million) into the business in exchange for an undisclosed stake.
Eventually, they took over full ownership after investing an additional Sh593 million ($5 million), closing the whole business purchase at Sh1.4 billion ($12 million).
Highlands started as a shop known as Padia Stores in Nyeri in 1947. It later transformed into a small-scale drinks factory before morphing up into a giant water and juice processor.
Mr Westerveld said they invested in the business through a private equity firm but later agreed as a team to invest directly as individuals. He is the current Highlands Drinks chief executive officer. “We invested in a company that had big prospects with huge market acceptance,” he said.
Unlike many business takeovers, where new owners change the brand name hoping to signify new ownership, Mr Westerveld and his co-investors chose to go against the grain and retained the name.
“Ego is the main enemy in the business where someone thinks he has overgrown his customers instead of improving on the brand they want. The focus should be to serve the consumers,” he said.
That strategic decision appears to be paying a dividend. All three products under the Highlands brand have a combined annual turnover of over Sh2.5 billion with 390 employees on permanent contracts.
Their biggest earner is Highland Juice followed by Club Soda and lastly, Water, which is facing stiff competition from established and emerging brands. “We export to Ethiopia, and South Sudan but our main focus is in Kenya,” he said.
His biggest success secret? Being resilient and at peace that sometimes you cannot change everything. And his resilience on things he cannot change came to test in 2016, the same period he teamed up with his business partner Jacco Brink and bought Nairobi-based Bio Foods Products which is known for its premium brand Bio Yoghurt.
Today, Bio Foods has an annual turnover of over Sh2 billion and works with more than 25 large-scale farmers who supply the business with milk.
But where did Mr Westerveld learn the art of doing business?
“My father was an artist who shaped my creativity. My mother would talk to me directly and she would allow me to participate in the pieces of training she organised at the age of 16,’’ said Mr Westerveld who studied History and is also an investor in Greenspoon, an online premium supermarket that deals with organic sustainable products.
He believes that for an entrepreneur to be ahead of the market, they have to be innovative. “Every month, we invite 30 consumers to our factory and let them taste our products against our competition. We don’t compete on price but quality, taste, and trust,” he said.