Unga Limited to Close five of its in-store Bakeries

Unga Group Ltd, in a bid to improve operating margins, has announced closure of more than five of its in-store bakeries.

The bakeries to be closed will be the ones that are mainly located in Nakumatt supermarkets, which are owned by Ennsvalley Bakery Ltd.  With this move, the Group will instead be supplying products from its central commercial kitchen located in Nairobi.

“This move is motivated by the need to consolidate certain business operations as the central bakery in Nairobi and Nakumatt’s intention to renovate the outlets,” the company said in a statement.

Ennsvalley added that it will continue to operate in-store bakeries at Nakumatt’s Mega, Galleria, Junction, Thika Road Mall and Village Market branches in Nairobi and Cinemax in Mombasa.

This exercise is contrary to the company’s expansion plan which included operating additional bakery facilities in Chandarana supermarkets. Unga Group acquired 52 percent stake in Ennsvalley in 2015, which saw a sharp rise in staff costs (+51.8 percent) in the year to June 2016.  The consolidation and integration of the operations of Ennsvalley is expected to continue as the Group focuses on production efficiencies from the baker.

Ennsvalley buys baking flour from Unga which faces increased competition in its traditional milling business. The bakery’s range of breakfast products includes bread, cakes, doughnuts, cupcakes and cookies. Reduction of in-store bakeries marks a reversal of the company’s recent expansion plan that included an agreement to operate Chandarana Supermarkets’ current and planned on-site bakeries.
Related: Kenyan Retail Sector Expanded in 2016 -P&G