How to Start / Open A Fish Supply Business in Nairobi Kenya

Fish Supply and Consumption in Nairobi Hotels (Kenya)



Overview

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This quick survey sought to understand fish requirements and consumption habits among mid level hotels in Nairobi CBD and environs.

The data from this survey should help you decide how to join the fish business as a supplier to hotels or reseller of sorts. The information will also help you understand the market, identify and hopefully seize related opportunities.

Particularly the survey looked to find out:

Quantities of fish consumed in the hotels

The kind of fish consumed,

Present suppliers

Buying and selling prices

What informs the choice of suppliers

And much more

The kind of hotels we surveyed are the large ‘dining hall’ kind of hotels which have become very popular in town. Think of hotels like Pals, Apple Green, Eden Times, City Star and such kind of hotels.

Results of The Survey

We present the information as a graphical summary before picking a sample of the hotels and going into particular details:

Type of Fish Sold

First we wanted to know the type of fish that is sold at each of the hotels we surveyed.

Type of Fish Sold

Tilapia

 

Tilapia & Fillet

 

Tilapia & Omena

 

 

 

 

10%

30%

60%

Most of the hotels (60%) only sell Tilapia. A smaller number sell tilapia and fillet, and only a few sell tilapia and omena. The choice of what a hotel is driven by customer demands, pricing and expected margins.

Number of Fish Sold

The research sought to know the quantity of fish sold by each hotel

Number of Fish Sold ( Daily )

10-50 51-100 Over 100

17%

16%

67%

Most of hotels (67%) surveyed sell 10-50 fishes in a day. Only a few sell over 100 fishes daily.

Present Suppliers

The survey sought to know who supplies fish to the hotels.

Suppliers

Individuals

 

Own Sourcing

 

Company

 

 

 

 

13%

25%

62%

The majority of hotels are supplied by individuals. This means entrepreneurs operating at an individual level, small company and not as a limited company or anything equivalent. Own sourcing means the hotels go to the market themselves rather than use the services of individuals or companies to supply them at their premises.

Frequency of Supply

The survey also sought to know how often the hotels buy or are supplied with fish.

Frequency of Supply

Thrice a week

 

Daily

 

Twice a week

 

Once a week

 

 

 

 

 

 

13% 12%

25%

50%

Majority of the hotels (50%) are supplied twice per week, and only a few are supplied daily or more than twice a week.

Buying Prices

The research sought to know the price at which the hotels buy fish; in this case the tilapia.

Buying Prices (Kshs.)

 

200 -250

 

Less than 200

 

 

 

 

29%

71%

Majority of the hotels buy fish at between Kshs. 200 and Kshs. 250. None of the hotels was buying tilapia at more than Kshs.250.

Terms of Payment

The survey also sought to know the terms of payment to suppliers after delivering the fish

Terms of Payment

Cash

 

Cash & Credit

 

Credit

 

 

 

 

25%

38%

37%

Majority of the hotels pay on credit. An almost equal number pay on both credit and cash. Cash meaning that they pay immediately on delivery.

Willingness to Change Suppliers

The survey sought to know how many of the hotels were willing to change from their present suppliers

Willingness To Change Suppliers

Yes No Maybe

10%

20%

70%

70% of hotels are willing to shift to other suppliers.

Considerations for Changing Suppliers

What reasons would make the hotels to change suppliers:

Considerations for Changing Suppliers

Price

 

Price & Quality

 

Price & Time

 

 

 

 

38%

50%

12%

Other Market Observations

Foods competing with fish are beef and chicken. And beef perhaps by virtue of its relatively lower price is generally consumed in higher quantities. Still this depends on the hotel. Some hotels have a reputation as fish places and these sell more (sometimes in the hundreds) than those where fish is simply another item in the menu.

The lowest quantity of fish consumed in a hotel was 10 pieces of tilapia while the highest were 250 pieces. This is from the hotels surveyed.

In all the hotels surveyed fish is prepared in two ways: Stew and Fried. Since the hotels are targeting the mass market they prefer to play it safe and not experiment so much.

Since deliveries in most Hotels are not daily they have deep freezers where to store the fish.

In hotels where fish is an important meal or the main meal then they prefer tilapia from Kisumu. They claim that ‘serious’ fish consumers prefer fish from Kisumu because it’s tastier. And they can tell the difference: Kisumu Tilapia is a bit dark while the Naivasha tilapia is ‘whitish’.

In hotels where fish is not a major meal but still an important part of the menu they are less choosy when it comes to the source of the fish. To them all fish are the same irrespective of the water they come from.

The reason that most hotels don’t source the fish themselves say from Kisumu or the markets is because of the logistics involved; they have to think of transport, time, selecting the best quality and other such factors. To avoid all that hustle they prefer paying a small premium to have the fish delivered to their premises. Thus as a supplier it’s important to understand it’s not that the hotels can’t source the fish themselves, they

can but then that won’t since it won’t be the best use of their resources and time. By supplying you will be selling them your time and expertise in fish.

Hotels which buy directly from markets don’t have fish as a key meal. Thus they will go to markets like Gikomba and buy the cheapest fair quality fish they can get. You will need to do much more to win such hotels as your customers. But they could consider you as a supplier if you equal or better the price their present buying price.

There are hotels which prefer to have more than one supplier. This ensures they have alternatives, you know just in case. Some hotels say anything could happen to the supplier; like sickness, accident or she decides to sell to other customers what she could have sold to the hotel. And if they don’t have an alternative supplier they can call on short notice it leads to loss of revenue. This means that if you want to get into the fish supply business you should not be discouraged just because you learn a hotel has a supplier.

The bigger the hotel, in terms of fish sales or brand name, the lower the price it will demand from you as a supplier. The reasoning being the lower prices will be compensated with high volumes.

Some hotels prefer individual suppliers to fish companies because they claim most of the fish companies sell deep frozen fish as opposed to fresh fish. They claim the former is not as tasty as the latter. Keeps this in mind as some of your sources might be these fish processing companies.

From the sample we found the hotels selling fish at various price points. These include: Kshs. 300, Kshs. 350, Kshs.370, and Kshs. 400. This is fish plus ugali.

The price points at which the hotels buy fish from suppliers include: Kshs. 70, Kshs. 200, Kshs.220, and Kshs. 250. The low price of Kshs. 70 is for a hotel which sources directly from the market without relying on suppliers.

Conclusions

From the above data the following is clear:

1.If you want to get into the business of supplying fish to mid level hotels in Nairobi, think Tilapia first and fillet a far second. Because the hotels sell more tilapia than any other type of fish they are more interested in suppliers who can provide Tilapia. And if you can do Tilapia well then it follows you can supply fillet or any other type of fish.

2.The needs of most of the individual hotels in the CBD are 10 – 50 pieces of Tilapia. When thinking of capital and logistics, think of 50 pieces. But when thinking of revenue think of the minimum which is 10 – 15 pieces a day.

3.If you are not a registered or established company don’t worry, Majority of those who supply fish to the hotels are individuals rather than companies. That said if you are thinking of expansion then it helps to register a company. Bigger hotels could refuse to deal with you if you are not a registered company. But you can start without a company. Most of the hotels pay in cash and operate a little informally thus there won’t be many hindrances if you are not fully registered.

4.You need to set aside at least two days in a week for delivery. In reality the days could be more or less but at the minimal it would be two days. The exact days will depend on the hotel. If you are supplying to many hotels you could end up delivering every day. Or you could sync them so that you deliver on the same day as to save money and time.

5.When prospecting for wholesale supplies know that you will be selling to most hotels at prices of Kshs. 200 - Kshs.250 (February). The prices could change.

6.Have some working capital; most hotels will take the fish on credit which can be as short as two days or as long as a month. During this period you should have enough working capital to continue delivering.

7.Majority of the hotels are willing to shift to another supplier or have you as an extra supplier. But on if your process is better, quality good and you can deliver on time. Delivering late could mean losses for the hotel, and that’s why time is very important.

Sources of Fish

Let us now look at the various sources of fish in Nairobi.

There fish that is consumed in Nairobi comes from other counties since there are no lakes or ponds in the city.

Fish can be from farms: think fish ponds. It can also from water bodies such as lakes, rivers and oceans. The fish from water bodies is preferred; those in the fish business say it is tastier and weighs more when compared to the farm fish.

And as we noted among the water bodies there is bias towards Lake Victoria as opposed to Lake Naivasha. Lake Victoria fish is a favourite supposedly because of superior taste and weight. Supply from Naivasha is also said to be inconsistent.

Fish suppliers to Nairobi can be classified as being from formal and informal sources.

Formal sources mean fish processing companies. These are fish companies proper. They buy fish from various local and international suppliers then process. Processing could mean something as simple as removing scales and internal organs to more advanced activities such as making fillet, canning or other forms of value addition.

Informal sources are represented by individual traders and small companies. These are not involved in any value addition; any processing they do is basic. This informal market is represented by the traders at Gikomba fish market which is the largest in Nairobi.

The Gikomba Fish Market

Overview

The Gikomba fish market is a distributor, wholesale and retail market.

Over 90% of the fish in Gikomba market comes from Lake Victoria. The rest comes from places such as Lake Naivasha.

The traders in the market operate in various ways. There are traders who have direct connections with fishermen or as is the case fish brokers in and around Lake Victoria. The brokers will gather the fish, put in an ice box and send to the traders in Nairobi via a bus, lorry or any other such means.

The other group of traders are brokers proper who buy fish from fishermen around the lakes, put in their own (or hired) refrigerated lorries and transport to Gikomba market. For references purposes we will call these “Lake Traders” and the fish traders at Gikomba “ Gikomba Traders “ . At the market Lake Traders sell to Gikomba Traders at what is essentially a ‘distributors’ price. The Gikomba Traders then sell to retailers or hotels at a wholesale price.

Another scenario is where the Gikomba Traders contribute money hire a refrigerated truck and send one of them or use a connection in the lakesides to buy fish and deliver to the market.

Gikomba Traders operate from market stalls of which they pay Kshs.700 per month to the Nairobi County Government

Fish transport companies and trades are Kenyan but there are a significant number of Ugandan companies. They transport the fish from Busia, Kisumu and parts of Uganda. They are at least 14 transport companies. Among the major transport companies are: Sources of the Nile which is a Ugandan Company and Fish Grill 237 Organic Company. The trucks have inbuilt freezers and the fish are transported in crates.

Two main types of fish dominate the Gikomba market; Tilapia and Nile Perch. Others which are brought into the market but in relatively smallest quantities are catfish and omena.

Gikomba Fish Prices

At the distribution and wholesale level fish is largely sold in kilograms. Lake Traders sell to Gikomba Traders a kilogram of tilapia at between Kshs.300 and Kshs. 380. If it’s sold per piece then prices starts at Kshs. 50 all the way to Kshs. 200. (February prices )

On buying from Lake Traders , Gikomba Traders, now sell either in wholesale or retail. Most of the wholesale trade is done in the morning. Trucks with fish arrive at Gikomba between 5am and 8am. Most customers seeking to buy in wholesale are in the market early so as to get the best quality.

Gikomba Traders now sell in wholesale to retailers . In February the wholesale price of a kilogram of Tilapia was between Kshs. 350 and Kshs.420. The exact price depends on the trader and the prices she bought from the truck. If selling piece by piece prices start at Kshs. 70 all the way to Kshs. 250 depending on the size and the quality. Prices could even be higher. And there is room for some little negotiating.

The trucks only supply fresh fish. Any fried fish is prepared at the market and mostly sold to retail consumers. Wholesale customers only buy fresh fish. Fried fish is only sold per piece rather than per kilo.

Major wholesalers can sell more than 400kgs in a day each.

Fish fillet is also not supplied from the trucks. Rather the women, yes 98% are women, buy the fish and make the fillet themselves. Gikomba Traders sell fillet at Kshs.550 per kilogram to retailers. (These are February prices. Prices could change depending on season, and they could slightly vary with different traders). Most of the fillet is from Nile Perch because it’s cheaper compared to Tilapia. Tilapia is also used to make fillet but such fillet is relatively expensive.

It’s important to note that some of the Gikomba Traders wholesalers are the major suppliers to hotels. To become attractive as a supplier then you must have a very competitive price. On the face of it Lake Traders can sell to anyone but they prioritize regular customers who they know and who buy daily.

Then the Gikomba Traders are informally organized and always realize when a new comer gets into the wholesale business. Some could create barriers to discourage new trader from getting into the business. However with good relationships you can overcome these barriers and buy directly from the trucks. One way to achieve this is by building a relationship with an existing trader so that she buys on your behalf. The barriers are there but overcoming them is not rocket science.

To be clear there are no barriers when buying from Gikomba Traders at wholesale price. In this case anyone can walk in and buy.

Hotels

Fishermen &

 

Lake Traders

 

Gikomba Traders

 

 

 

 

 

Retailers

 

 

 

 

 

 

Brokers

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumers

Fish Processing Companies – Process and Prices

Overview

Like we noted these are the companies which buy fish from various sources do some basic or advanced processing, package and sell at a wholesale price. Sources could be Kenya, Uganda, Tanzania and even China. This depends on availability. Their main customers are hotels, institutions, wholesalers, fish suppliers, supermarkets and large consumers.

In most of these companies you can just walk in and buy the fish. No tough conditions or anything. When starting payment terms are cash but as you purchase bigger quantities and

build a relationship with them then you can negotiate for credit facilities or other favourable terms.

Most companies have minimum quantities which usually start at 10 kilograms.

Prices

To get an idea of the buying and selling prices here are some samples from some of the companies:

Alpha Fine Foods

Contact: Josephine – 0721 789418

Type of Fish: Tilapia, Tilapia Fillet, and Nile Perch.

Sources: They get their fish from Kisumu, China and Tanzania. All this depends on local availability.

Alpha sells tilapia fish in two forms:

Without scales and have internal organs.

With scales and without internal organs.

The fish is grouped according to weight. For instance 100gm – 200gms means the fish in that batch will be between 100gms and 200gms. The minimum purchase is 10kg.

 

Without Scales But Have Internal Organs

Weight Range ( grams)

 

Price ( Per 10kg )

100 – 200

 

1550

200 – 300

 

1900

300 – 400

 

2200

400 – 500

 

2500

500 – 800

 

2800

 

 

 

Tilapia Fillet

 

Kshs.730 / Kilogram

Nile Perch Fillet

 

Kshs. 600 / Kilogram

 

With Scales But Have No Internal Organs

 

 

 

Weight Range ( grams)

 

Price ( Per 10kg )

 

 

 

100 – 200

 

1900

 

 

 

200 – 300

 

2500

 

 

 

300 – 400

 

2800

 

 

 

400 – 500

 

Out of stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 – 800

Out of stock

East African Sea Food Ltd

Type of Fish : Tilapia and Nile Perch

 

 

Tilapia

Weight Range ( grams)

 

Price ( Kshs per 10kg )

100

– 200

 

1500

200

– 300

 

1725

300

– 400

 

1875

400

– 600

 

2075

600

-800

 

2275

800

– 1000

 

2375

1 kilogram and above

 

2475

 

 

 

Tilapia Fillet (10 kg )

 

Kshs.7500

Nile Perch Fillet (6kg)

 

Kshs. 5525. ( Can also sell 1 kg at Kshs.550 )

Jambo Fish Western (K) Ltd.

Contact Person: Gilbert - 0708906507.

Type of Fish: Tilapia and Catfish and at the same price.

Price : 300gms – 400gms which is the standard is Kshs.300 per kilogram.

Jambo Fish Western sells farm fish from their own ponds which they operate in Western Kenya. Their Nairobi office is located at Ridgeways.

Other companies include:

Safeway Meat & Fish : Westlands, Mpaka House - 0721268881.

Amco foods Ltd

Kenya fish processors and exporters association.

Dominion farms

City Market

City market is another key source of fish consumed in Nairobi hotels. More or less they have the same supply chain as the traders in Gikomba. The traders there largely sell Tilapia and Nile Perch sourced from Lake Victoria and a little from Lake Naivasha.

They sell a kilogram of Tilapia at between Kshs. 400 and Kshs.450. If they are selling piece by piece it’s between Kshs. 170 and Kshs. 250 depending on the size of the fish.

Where To Source From

Ideally you should buy from the cheapest source so as to make the most profit when supplying to the hotel. Looking at the above there are minimal price variations between different suppliers. Even the price difference between Gikomba Traders and the Processors is not big. Indeed in some cases the processors are cheaper than the Gikomba Traders.

When buying from Gikomba or City market you have to think of transport and presentable packaging. The advantage with fish from the processing companies is that they are better packaged. However the disadvantage is that there are customers who will decline if the fish is ‘frozen’ rather ‘ fresh’ . Also processing companies get the fish from different sources local and international. Where hotels are very particular about the source of the fish they might be hesitant to buy if it’s not from their preferred source unless of course you are convincing enough. These are minor hiccups which can be overcome. The market is big enough.

Revenue and Margins

Fish sold within Nairobi varies in size. Some are small while others are very big. That said the standard fish, which is technically refried as table fish, is between 300gms and 400gms. Though this size is considered standard every hotel will have its own specifications.

For purposes of this illustration let’s assume, which is a good assumption that, you are supplying fish table fish 300grms – 400grams. Alpha sells 10kg of this size @ Kshs.2800. If the fish are 400 grams each then 10 kilograms will be 25 fish (10 x 1000/400). This means that the price per fish will be Kshs.2800/ 25 = Kshs.100.

If you are selling to a hotel each at Kshs.200 then you will be making Kshs.100 gross profit on each fish. If you are delivering 25 fish every day then that is 25 * 100 = Kshs.2500. But this is the best case scenario. The margins could be much lower if you consider fluctuations in prices, transport costs, size of fish required and more. For planning purposes think of margins of Kshs.50 per fish.

What is not in doubt is that the margins are good. But good margins mean nothing if there are no sales.

Summary: To Become A Fish Supplier

Identify source of Fish : Gikomba, Fish Processing Companies, City Market . When you are more established and selling significant numbers then you could start thinking of ordering direct from the lakes.

Consider source in terms of price, quality and reliability. The price and quality will be your edge as you pitch to the hotels.

Identify hotels that can become potential customers – First visit the hotels incognito, see the kind of fish the sell, look at the size and the price at which they sell. Talk to a waiter or a manager and know the source of fish. Know the purchasing process. Who is responsible for purchase decisions. This differs with each hotel.

Approach with your offer. Insist on bringing free samples; they don’t have to pay for those. For the sample source for fish which is better or equals what you see. The price should be equal or less than their present buying price. Package in a good way. Deliver the free sample. Follow up to know what the hotel thinks and whether they will give you the contract. If they turn you down get feedback and use it to improve.

Remember the key factors hotels consider when picking a fish supplier are:

Price

Convenience

Quality

Other factors will include hygiene and presentation. You can invest in a cooler box to transport the fish. And as an addition get a medical certificate and business permit from the county government. There are many hotels which won’t ask ; it’s not the biggest consideration but use this to validate yourself even more.

Discuss terms that is if positive. Keep in mind terms of payment, quantities , quality and remember fish prices could change

Start delivering

The above is a general template of how to become a supplier, the specifics will depend on the hotel.

Licenses

To operate stress free it’s good if you have the necessary licenses to operate a business within the city. The county government has introduced a unified business license which is what would be applicable in this case. The unified license includes a Trade License, Food Hygiene License, Health License and Signboard License. Of course the latter is assuming you have premises. At

the very least eve if you are operating informally make sure you have a medical certificate of your own or your workers if you have some. Budget at least Kshs. 25,000 for all the licenses.

Premises and Storage

Whereas it’s possible to operate this kind of business without a premise, and simply from market to hotel, the model will not be tenable as you expand your business. It will important to have a reference point of sorts. More so it could be necessary to buy fish in bulk and store for a short while before delivering. If you are going to store the fish then you will need a deep freezer. The prices of deep freezers depend on size and brand. Budget at least Kshs. 40,000 for the deep freezer.

You will also need cooler boxes to transport the fish from the markets or premises to the hotels. Prices will depend on size. Budget at least Kshs. 8,000 for the cooler box.

Other related expenses if you have a premises will include renovation and rent.

Again we stress that you can start operating without licenses or premises but if you plan to grow then you will definitely need to think of these items.

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