FMCG Kings. The Ontology of Trade Kings

Although TFHZPC loves to dig into the financials of listed companies, there is one company that has been in existence for over 20 years in the Zambian market that has impressed us with its progression. There is very little information about the company in terms of the mechanics of its management because it is not listed. We desire that it should be but that is a decision that would have to be taken by the founders of the company. However, we hope to engage them over a glass of wine or cup of coffee to unravel how this washing paste company that started off with only 40 employees producing 100 tons of Boom paste per month using one self-delivery van became the biggest Fast Moving Consumer Goods (FMCG) Company in Zambia.

Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG) are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries,over-the-counter drugs, processed foods and many other consumables.Trade Kings is clearly the leader in Zambia when it comes to these goods. Yousee their products of many of the shelves of leading supermarkets such as Shoprite (which has the largest chain of FMCG stores in Zambia) and small “nthemba style” outlets that are ubiquitous in many of Zambia’s densely populated areas.

With trace information about the company available, their website reports that they are currently employee 1500 employees and manufacture over 5,500 tons of market-leading branded Soaps,Detergents (Powders, Pastes & Liquids), Sweets, Lollipops and Soya Nuggets.

When it comes to resources such as property plant and equipment (PPE), they boast of 20,000 sq. m. wholly owned factories which are supported by a transport Fleet of over 25 Heavy, Medium and Light truck units. When it comes to financial resources, they have grown a business thatthey say is has consistent organic financial growth. Which would lead us to believe that they carry no debt on their books and finance their growth proceeds from operations. However, like we indicated, we have no access to their financials because they are not listed.

Economies of scale and scope are evident in their strategy. You see in how ubiquitous their products are and the product ranges they continue to release year after year. You also see it in how aggressive they are in terms of advertising their products. However, attending the recently held Manufacturers Association of Zambia annual general meeting on Friday 30 June 2017, we learnt from a speaker from PACRA that the company has one of the largest collections of patents and trademarks in Zambia. This is a signal that the company invests in its research and development. This is evident from how their products have evolved. Furthermore, their trademarks are everywhere.The only other brand that has this much visibility is Coca cola.

According to Bloomberg, their leadership is comprised of Khalid Mohamed (Group CEO and Director), Arif Mohammed (Board Member), Zunaid Patel (Board Member), Iqbal Patel(Board Member) and Ayyub Adam(Board Member). TFHZPC hopes to have a sit down with this astute management team and bring more insights into how to grow an FMCG in Zambia. For now, we believe that Trade Kings is successfully building love marks in the hearts of many Zambians. As analysts, we believe this is a company that is solely focused on product. Competitive advantage for the company is being achieved through a mixed strategy. They are cost leaders in some of their products as well as product differentiation in others. The dominant strategy is cost leadership due to the nature of the FMCG market.

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