Kenyan company taps into multi-billion dollar fish farming opportunity

Victory Farms breeds tilapia fish species in Lake Victoria in Kenya.

Tilapia producer Victory Farms has built a vertically integrated business that includes everything from a fish farm in Lake Victoria to its own distribution network and retail branches. Tom Collins spoke to Joseph Rehmann, CEO and co-founder of Victory Farms

Unlike other commercially farmed fish, scientists and researchers have yet to pay special attention to tilapia, a freshwater fish native to Africa. Although tilapia is one of the most commercially farmed fish in the world, it is largely grown by smallholders and often in less developed countries. It has therefore been largely ignored by businesses, universities and other institutions, which have focused more on species like salmon.

That’s the view of Joseph Rehmann, CEO and co-founder of Victory Farms, a tilapia company on the shores of Lake Victoria in Kenya. The species is not widely eaten in Western countries; therefore, companies have not invested time and money in finding the most efficient way to grow the fish.

Rehmann believes that despite the lack of investment, the tilapia industry presents a multi-billion dollar opportunity. “The history of tilapia in Africa is huge,” he says. “And there aren’t many companies looking at tilapia from a business perspective.”

Create new fish farming techniques

Victory Farms started operations in 2016 and aims to become one of Africa’s largest commercial tilapia farmers. The company had to devise its own fish farming process as one of the pioneers of commercial scale tilapia farming in Africa.

“There is almost no one currently making tilapia equipment in the world, which is an amazing statement as it is one of the top three farmed fish in the world. It is farmed by millions of smallholders and feeds billions of people, yet because it is a small industry, there has never been a serious investment in fish.

Victory Farms sells most of its fish to informal market traders.

Victory Farms sells most of its fish to informal market traders.

The CEO says it was crucial not to simply duplicate the techniques of other commercially farmed fish, but rather to create a method suitable for tilapia and Africa. “We couldn’t just copy and paste the recirculatory aquaculture system (RAS) style of fishing in Holland; the pond system from Thailand or the cage system from Norway. This required a hybrid approach. We believe that Africa needs its own solutions.

At first, Rehmann and his co-founder Steve Moran learned that Lake Victoria was unsuitable for aquaculture because it was too nutrient-rich, shallow, and cold. However, after technical and commercial feasibility studies, they decided that Africa’s largest lake was ideal for tilapia.

He explains that Victory Farms has one of the largest fish cage systems installed in a lake in Africa.

The company has also designed its own RAS technology, suitable for an open environment like Lake Victoria. RAS is typically used in indoor tanks; the water is filtered and recycled to the fish. But Victory Farms has created a hybrid model where the fish are raised in a natural lake. They are fed protein and carbohydrate pellets without antibiotics. This unique process is more efficient than other RAS techniques, which positions the company well to compete with major global producers.

Victory Farms has about 30 million live fish at any one time and sells about two million tilapia each month. “If you look at our growth trajectory in just a few years, it’s the fastest on the continent. If you look at our capital efficiency, we are significantly more efficient than some of the largest tilapia farmers in the world.

A Victory Farms distribution truck.

A Victory Farms distribution truck.

Vertically integrated model

Victory Farms has set up quite an innovative sales and distribution system, delivering fish to hundreds of market vendors in 12 counties in Kenya every day. The vertical integration model allows the company to ensure the efficient delivery and sale of fish.

Previously, he had struggled with external logistics companies that turned off refrigerators to save fuel costs, causing fish to spoil.

“We supply our 56 branches every day and are aiming for 65 by the end of the year. Our refrigerated trucks travel around Kenya delivering fresh fish to branches daily,” Rehmann reveals.

“These branches sell to market women through M-Pesa, so everything is cashless. And the ladies usually cook and sell them the same day.

None of these 56 branches, which are branded outlets owned by Victory Farms, have ice or refrigeration equipment; all the fish is sold in one day. To make this possible and not lose any fish to rotting, Victory Farms maintains a data set on each market trader to predict how much fish they will sell. Market traders enter orders and sales through an SMS platform.

“We can accurately predict how much fish to store in the branch tomorrow, so we don’t have any spoilage. Our waste is less than 1%.

About 90% of Victory Farms produce is sold to these market traders and 10% goes to hotels and restaurants. Rehmann says the company will eventually consider supplying Kenyan supermarkets, but so far the focus has been on “the mass market”, which provides access to 48 million consumers, compared to just two million consumers. in high-income areas.

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