This archive report was first published on 27 July 2021.
July 27, 2021 - Nairobi Exchange-listed Unga Group PLC is set to exit the baking business for the second time, selling its Ennsvalley Bakery to BigCold Kenya Limited.
The move comes as the company seeks to cut costs and improve efficiency in the face of high production costs and low demand for bread.
Unga Group had acquired Ennsvalley, the makers of premium bread, in 2014 as part of a strategy to diversify its income and reduce its reliance on milling maize and wheat flour.
However, the company has been grappling with competition from mini bakeries, retail chains, and established bakers, whose cost of bread is lower than Ennsvalley's high-end variety.
According to Unga Group, BigCold Kenya Limited and Ennsvalley Bakery Limited entered into an asset purchase agreement on July 26, subject to the satisfaction of certain conditions.
The sale of the bakery business comes at a time when bakers are struggling with high costs of production amid low demand for bread due to reduced purchasing power by consumers.
The cost of wheat at the international market has gone up by nearly 30 percent, prompting a price rally on the price of bread.
