HIGHLANDS DRINKS LTD

By Paul Ongeto

Ahousehold name in Kenya, Highland Drinks Limited has been refreshing Kenyans with great-tasting, refreshing, and affordable products since 1954. "I think everybody in this room and outside has grown up with a product of Highlands, whether it's water or cordials," says Joachim Westerveld, CEO of Highlands Drinks Limited.

Putting dates to figures, Joachim tells us the company was founded in 1954 by the Padia family. However, Highland's history stretches back eight years before that to 1947 when Mr. Tribhovan Padia opened a shop in Nyeri.

Production of the Highlands cordials did not start until 1986 when Highlands Orange cordial was released to the market. Before striking the sweet spot with the cordials, Highlands Drinks had experimented with a number of soft drinks. Softa, Mirinda, and Babito were soda brands produced by Highland Drinks that were wellknown in the late 70s, in the 80s, and early 90s. When people from this period remember the good old days, these brands certainly come to mind.

Now in production for the 37th year running, Highlands Drinks Cordials have expanded to include four other flavors, namely lemon, mango, pineapples, and tropical. Mineral water, which was first introduced in 1990, is also thriving and is today available in various packs from the tiny 500ml PET back to the jumbo 20-liter non-returnable plastic bottle.

DISRUPTING KENYA’S SOFT DRINK MARKET

Highland Drinks' fame in the soft drinks market caught the attention of a group of Dutch investors, led by the TBL Group, who in the late 2000s invested in the company with a mission to take it to even greater heights. "We said this is a great company with a great legacy, good history, a beautiful production plant, and it's a great platform," Joachim says. "Together with the Padia family, who founded the company back in 1954, we said we were going to disrupt the Kenyan soft drink market."

The disruption took the form of a re-entry into the carbonated soft drinks category. Highland's exit from the scene in the early 1990s left only one dominant player in the market. Left with very little choice, consumers became accustomed to this reality until Highlands under the patronage of new investors decided to shake up the market a little bit. "Kenyans deserve a better alternative and Kenyans deserve an affordable alternative," the vibrant CEO says. "So that informed our decision."

A return to carbonated soft drinks required significant investment in machinery and research and development. The process began in 2009 when the company conducted a factory upgrade to its facilities and commenced R&D on three new Carbonated Soft Drinks. The whole process culminated in 2014 when Club Soda Drink (CSD), a new carbonated soft drink brand from Highlands hit the market with three flavors.

To meet customer demand for a variety of flavors, Highlands added three flavors: Blackcurrant, Pineapple, and Passion to its range of Club Soda drinks in 2016. A brand refresh occurred in 2018 with the CSD name dropped in favor of CLUB, a simple yet memorable brand to reflect the brand's growth into a household name. Three new flavors, Apple, Mango, and Pina Colada were also added to mark this new milestone. The big packs in the form of 1.25-liter bottles were introduced two years later in response to market demand for family-size packs. Joachim is happy with the progress the company has made thus far. "We've been hacking ladders for the last couple of years, and we're slowly but surely disrupting the markets with a bettertasting product that's more affordable," he says.

FRESH WATER, FRESH DRINKS

Padia had a strategic reason for locating the factory in Nyeri. Although the town was considerably smaller compared to Nairobi, Kenya’s capital, it had an abundant supply of fresh spring water that flowed into the town from the nearby Aberdare ranges.

Naman Kimathi, Head of Operations at Highlands Drinks, says that this unfettered access to fresh spring water gives Highlands a competitive advantage in that it is able to maintain a certain consistency in the quality of its mineral water and, by extension, its drinks which also use the water as their main raw material. He notes that other beverage and water bottlers using groundwater may not

Key Numbers

1954

The Year

Highlands Drinks Limited Was Incorporated As A Beverage Company

BELOW: Cordials have been part of the highlands range since 1986 and water since 1991 enjoy this kind of advantage as its mineral composition keeps varying and treating it to a level that matches spring water Highlands receives from the Nyeri Water and Sewerage Company is almost impossible.

Although the water is usually subjected to some level of treatment, Kimathi notes that Highlands subjects its water to further treatment checks to bring it to desired quality levels before it's bottled or used to make other soft drinks. “Just out of an abundance of caution, our water is first passed through sand filters to trap any debris that may have escaped initial treatment stages by Nyewasco,” he explains.

The next treatment stages include chlorination to inactivate any present microorganisms and a second stage filtration with cartridges that can filter up to 0.45 microns to remove chlorine and bacteria. The dechlorinated water is then passed through a chamber that contains a UV lamp. As the water flows through the chamber, the UV light targets and kills any microorganisms present, including bacteria, viruses, and protozoa. “That's how we guarantee the quality of our water,” a proud Kimathi concludes after taking us through the entire water treatment process at the facility.

A team of qualified quality assurance officials is always at hand to check on the effectiveness of the treatment procedures before water is directed to a nearby line for bottling or held at a temporary storage tank for use in the production of cordials and carbonated soft drinks. A fully furnished lab is nearby where tests such as pH, electrical conductivity, total dissolved solids, and chlorine are conducted on water samples to assure quality and safety.

“If we are doing cordial or carbonated soft drinks, the water is directed to another compounding tank where other ingredients will be added depending on the formulation,” Kimathi explains. “It’s mixed for a minimum of 45 minutes to achieve a homogeneous drink after which it is released to go to the filling lines.” A team of professional quality assurance officials monitors the entire process to ensure each and every bottle contains a safe and high-quality drink. “They take samples every 30 minutes for quality assurance checks,” Kimathi explains. Just like water, these drinks are subjected to a number of tests including brix and pH.

A Sustainability Mindset

"Sustainability is one thing that Joachim is passionate about. "We can see that global warming and climate change are real, and I think the only right thing to do as a business is to bring sustainability to the core of your strategy because otherwise, you're robbing yourself, your children, and the families of your workers of their future."

Under his guidance, Team Highlands has implemented a number of initiatives to reduce the company’s carbon footprint. In 2021, the company installed a 385 KWp solar PV plant that currently generates about 18% of the company's total electric energy needs. "We have also continuously undertaken several small energy efficiency initiatives in our manufacturing sites that have reduced our energy intensity from 0.9 Kwh per liter in 2019 to 0.78 kwh per liter in 2022," he adds.

Like many CPG companies, plastic packaging contributes the largest share of its carbon footprint. Highlands is, however, proactively seeking ways to lessen the impact of its packaging on the environment. An industry first, the company recently removed plastic bottle cap sleeves from its water and cordials packaging to minimize plastic waste. Plastic will, however, continue to be an important part of its packaging profile. "We will always go for the solution that is most sustainable," Joachim says. "But at this point in time, plastic is the most economical and also potentially sustainable solution globally. But it has to be made sustainable, and that's why we, as Highlands, have been very much at the forefront of recycling." The CEO reveals that Highlands pays a considerable amount of money to PETCO to have its plastic recycled. "This means that for each gram of PET that we produce and bring to the market, a gram is collected and recycled," he explains, adding that he looks forward to the introduction of recycled PET, which is currently unavailable in Kenya. "We will be the first ones to buy that product because we believe that's the solution for the future."

At Highlands, sustainability extends beyond the environment and involves building a business that can thrive even in tough market conditions. "We have a lot of initiatives ongoing in our production to make sure that we become as efficient as possible," he reveals. "We're even looking at CO2 leakage and electricity consumption and driving to be a world-class efficient operation." This, according to the CEO, takes little from the environment and also lowers the cost of its product, enabling Highlands to remain affordable despite runaway inflation that is currently pushing up prices in Kenya and eroding consumer purchasing power."

BELOW: The key staff behind the quality products that Highlands is known for.

Staying Ahead With Innovation

One thing that sets Highlands apart from its peers is its innovative spirit. Time and time again, the company has not failed to impress consumers with unique flavored products. Its Club soft drink range alone is comprised of 10 different flavors, some of which are only unique to Highlands. Its recent product innovations such as Bazuu Energy drink and Club Lemonade are shaking the various categories they are in to the delight of consumers.

With so many successful new products, one wonders how the company always gets it right. “Our secret is to be very close to our consumers, understand what they want, develop a prototype, fine-tune it based on their feedback, and then bring it to the market,” Joachim reveals.

Understanding their market is also one thing that Highlands seems to have mastered.

Joachim Westerveld, CEO, Highlands

“Our target market needs that diversity,” Kaari reveals. “They want to taste everything. They want to be unique. They want to be special. So we have to make them feel special by giving them what they ask for.”

Highlands customers will certainly continue feeling special as the company has more products lined up for launch in the near future. “We have always been trendsetters, so we'll soon be launching some very good flavors,” Joachim confides. Cordials which have for a long time stagnated at just 5 flavors will see more new flavors added under this new plan. Energy drinks and even the already diverse range of CSD will also see new flavor additions, according to Joachim.

A Winning Marketing Strategy

Highlands’ market success has a lot to do with the taste of its products. Joachim tells us the company goes to great lengths including conducting regular blind tastes with consumers to come up with a taste profile that truly aligns with the Kenyan consumer. “That means that once you put the product on the market, we are sure that at least from a taste profile, people would prefer it. And then our job is fairly easy,” Joachim says. His statements are echoed by Kaari, the person in charge of sales. “If the customer loves the taste of our products, they will come back,” she says. Charles Momanyi, the Route to Market Manager, adds that Highlands also actively seeks partnerships with beverage players in other categories to deliver an even superior taste experience to consumers. A good example is the recent successful experiment between East Africa Breweries’ Chome Gin & Chrome Vodka products with Highlands’ own Club Lemonade mixer.

Taste is one part of the marketing equation, the other is competitive pricing whose role has risen in prominence as consumers, battered by inflation, actively seek out quality but affordable products. “We understand that our consumers’ budgets are tight, so we are actually looking to remain a little bit more affordable,” Joachim says. Highlands goes beyond offering customers competitive prices. It also regularly conducts sales offers and promotions where customers either get huge discounts or prizes and shopping vouchers according to Kaari not only eases the cost-of-living burden but also improves brand loyalty.

Of course, the traditional ingredients to successful marketing including having an extensive distribution network and having the right people on the ground have also played their rightful role in the success of the Highlands brand. “Our strategy is that we deliver directly to the customer wherever they want the product, be it at the branch level or central warehousing. Then we have a team on the ground, to ensure that that it has been placed on the shelf,” Kaari reveals adding that delivery is also prompt, mostly the same day the order is made or the next.

Teamwork Makes The Dream Work

Joachim is not just the CEO of Highlands. He is also the Chief Executive Office of Bio Foods, one of Kenya’s leading dairy companies. Managing one company can be a hell of a task, but Joachim seemingly has no problem heading

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How is he able to one effectively manage two given the demands that each one presents? The answer lies in building a very independent and proactive team, Joachim reveals. He tells us that he spent a good time with his key staff early on, coaching them to become better professionals, so that later he does not have to spend a lot of time checking, controlling, and interfering with work he has entrusted to do. “I trust their abilities to deliver,” he says.

Despite having trust on his team, Joachim is however not detached from Highlands. He is ,in fact, part and parcel of that very independent and proactive team that he described above. “We have very structured meetings where we make sure that we're aligned,” he reveals. “It gives me and everyone at Highlands a good picture of how we are doing as a company and that allows me to only get involved in the places where I should get involved.”

The spirit of teamwork has permeated through the entire workforce and from our observation, everyone, regardless of their position at the company was working towards making Highlands and Club brands successful. During weekly town hall meetings, employees are encouraged to speak freely and give ideas on how the brand or operations can be improved even further. “In this business, everyone is a CEO and will query work processes, sales achievement, and market engagement based on personal ownership,” Joachim reveals. “This has been key in getting us to the top.”

A Pipeline Of New Investments

Being the fastest-growing beverage company in Kenya has its drawbacks; quickly running out of capacity. Norman admits that the current warehouse is not able to hold as much stock as needed to match the demand in the market. Joachim, however, promises that this would not be the reality three years from now. “We have a master plan for this factory,” he says. The plan involves acquiring new machinery and setting up new production and warehouse spaces that can handle bigger production volumes. “We are at the starting point of our investments and are investing in some machinery as we speak,” he says. “In three years' time, this place will be totally different.”

With more capacity planned, the company is now exploring exports with Uganda and Rwanda being the first in mind. Exports haven’t started yet, but Kaari reveals that great progress has been made on the research front on both markets. “And we've already got partners,” she reveals. “However, we are very cautious about how we're going to handle it. We are working on a marketing plan, and once we are clear on the products we want to launch and the region, only then will we commence exports.” FBA