Firm faucets into demand for important oils from Kenya’s arid areas

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A selection of essential oils from Agar Ltd.

About a quarter of the global land surface consists of arid and semi-arid arid areas. By definition, precipitation in these areas is less than 500 mm per year. Providing livelihoods for the approximately 20% of the world’s population living in these areas has been a development issue for governments and nonprofits for some time.

For an Italian entrepreneur living in Kenya, these arid areas offer a clear business opportunity. Tommaso Iser Menini founded the African Agency for Arid Resources (Agar Ltd) in February 2018 after becoming frustrated with his community service in Kenya. Communities were empowered to collect agricultural goods but had no access to a market to sell them.

“If you give capacity to so-called beneficiaries, but do not define a commercial exit strategy for the products, you create bottlenecks. I’ve seen this over and over while helping pastoral communities improve the collection of gum arabic, ”explains Menini. “I realized that more private sector engagement was needed and I just became the private sector that I couldn’t find.”

In the beginning, Agar Ltd was founded as a raw material dealer for gum arabic (harvested from the Acacia Senegal tree), black frankincense (from the resin of the Boswellia Neglecta tree) and myrrh resin (tapped from the Commiphora tree). Gum arabic is widely used as a stabilizer and emulsifier in the food industry, while frankincense has gained popularity as an alternative treatment for pain and swelling and is used as a fragrance in cosmetic products. Myrrh is also used as a fragrance and to treat some medical conditions.

Tommaso Iser Menini in Isiolo County, Kenya.

Very quickly, within the first two months, Menini realized that the company had to add value in order for the business to be sustainable. “We moved large deliveries of the raw material, but the margins weren’t big,” he says.

In June 2018, Agar Ltd was asked to participate in an expo for Italian companies in Nairobi. Although the company is entirely of Kenyan origin, Menini took the opportunity to increase its presence and quickly found a third party manufacturer who made essential oils from the existing frankincense and myrrh resins. At the expo he sold directly to the public. “We made $ 1,000 in two days with these two essential oils. It was then that I realized that essential oils are a good market to immerse myself in. “

A trademark is born

Over the course of a year, Agar Ltd conducted extensive research in both the local and international markets before deciding on its product range and sourcing strategy.

In September 2019, Essenza by Agar – the company’s retail arm – was launched with 11 essential oils that can be used to alleviate various health conditions. Nine of them come from Kenya: myrrh, frankincense, geranium, lavender, rosemary, clove bud, lemongrass, tea tree and citronella. The eucalyptus oil comes from Rwanda and ylang ylang from Madagascar.

“The retail branch has helped us understand how to get from trees to shelves. We now have multiple vendors selling Essenza products across East Africa. We also have marketers in Italy, ”notes Menini. The company also has its own online shop and offers worldwide shipping in cooperation with DHL.

Agar Ltd produces essential oils from trees found in the arid regions of Kenya.

With frankincense and myrrh everything is done in-house except for the distillation: procurement of collectors in Kenya – who the company has trained for the harvest – sorting and cleaning as well as filling, labeling and distribution.

“Agar was given a loan to install our own distillation capacity about two years ago, but something made me wary of running this debt back then. It was just before the pandemic broke out. “

With essential oils stocked on the shelves of most retailers that Agar Ltd approaches, the company praises its oils as being high quality, ethically sourced, and certified organic. “We usually go out with the sales team and compare our product with what is already available. We have strong essential oils in terms of quality and that can be clearly seen when compared to the imported products, ”he says.

Another successful strategy was to focus on white label customers. Agar Ltd currently offers white label options to seven customers, including Kenya’s health chain Healthy U. “We have targeted Healthy U quite aggressively as our research has shown that they serve as the essential oil focal point in the country. Today we are the only supplier of their in-house line of essential oils under the brand name Aroma Essentials. We deliver a packaged and labeled product that is ready for sale, ”adds Menini.

The next phase of growth through diversification and export

Agar Ltd will set up its own aloe farms in the coming year with a grant of £ 100,000 from the Kenya Catalytic Jobs Fund (KCJF) received at the end of 2020. The money is to be used to build up the supply of local aloe for a range of body products, the company brings to market: shampoo, conditioner, liquid soap, body lotion and shower gel.

“We are building our own nurseries that will grow 200,000 seedlings in the first year, and we continue to support the pastoral communities that will grow into aloe so we can buy the raw material from them. The aloe farms will also create a green wall against desertification and further our mandate for dry and semi-arid resources. “

Incense resin

The range of Aloe products is specifically aimed at the hospitality industry, which has been hard hit by the pandemic; However, Menini remains optimistic and says the company is starting to attract its first hospitality clients. “We are now ordering liters of these products for use in AirBnBs, lodges and hotels.”

Aside from the KCJF grant, Agar Ltd funding comes from Menini himself, his family and friends, and a Japanese seed investor, Kepple Africa.

Menini reveals that building the distillation plant is the next step for the company after winning a customer for the bulk export of essential oils, specifically for incense. It hopes to revive commercial talks that subsided over the past year or so due to the pandemic.

“We are looking for a buyer who takes one to two tons of frankincense essential oil with him per year. If we can find a strong buyer who understands that supply from Ethiopia and Somalia is declining and that we can supply high quality oil from non-endangered trees, the company will move to the next level, ”he says.

Contact details of the managing director of Agar Ltd, Tommaso Iser Menini

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