While its Ivorian mattress factory has just started up, the Richbond group has announced the purchase of Silent Night Kenya, a bedding manufacturer in Nairobi. A strategy of geographical diversification combined, in Morocco, with diversification outside the industry.

The Richbond group announced on May 30 that it had finalized at the end of April the acquisition of 67% of the capital of mattress manufacturer Silent Night Kenya, which has a factory with 80 employees in Nairobi. The Moroccan group, which has annual sales of 1.5 billion dirhams, will pay 110 million dirhams for its stake and the upgrading of the company.

"I have travelled to all African countries in search of a pearl to buy. Among these pearls for sale, there was this British brand which dates back to the presence of the British in Kenya, and which was then sold to an Indian family for whom the development of the company was not a priority," explains Karim Tazi, director of the Tazi group, in charge of Richbond's international development.

In Kenya, Richbond will continue to manufacture and market the Silent Night Kenya brand of mattresses, to which it will add the Richbond brand and sub-brands. The first "Richbond-style" mattress left the Nairobi plant on May 30. Mattresses from the American brand Simmons, which the group holds the license for in Morocco, are expected to be added.

While investments by Moroccan companies are still rare in East Africa, Karim Tazi explains that he chose Kenya because "regional integration really works in this part of the continent. From Nairobi, our goods will really be able to enter Uganda, Tasmania, Rwanda and Burundi.

He also notes that the Kenyan economy is a "resilient economy," not subject to the large fluctuations in commodity prices on which other African economies are based.

"Among the conditions that were set during the transaction was the fact that we would continue to be accompanied by the previous owners who know the market. This time, we bought an existing company, because we had to go through a lot to establish ourselves in Côte d'Ivoire," says Karim Tazi.

The Ivorian hangover

A Richbond factory of 18,000 square meters has indeed been running in "soft opening" for a few weeks, with a hundred employees, in the industrial zone of Yopougon, in Abidjan. This project, initiated in 2014, required an investment of 120 million dirhams, and earned the Moroccan group some cold sweat.

Richbond built its factory on land that the group leases from the Ivorian government. Problem: "this land had previously been leased to a Lebanese investor. However, the latter has not made the promised investments, and the Ivorian state has therefore taken over the land. Furious, the former tenant placed containers to block us. It took us two years to dislodge him," says Karim Tazi.

Despite these difficulties to make a place in the sun in West Africa, Karim Tazi praises the benefits of the Moroccan presence there. "Our investment in Côte d'Ivoire is financed for a third (40 million dirhams) by the local subsidiary of Atijariwafa Bank. Without partners who know you because you already work with them in Morocco, it would have been even harder," he notes.

Another useful Moroccan presence for Richbond is the distributors. 40% of the Ivorian distribution circuit of bedding is held by Moroccans. Even the arrival in Côte d'Ivoire, in 2017, of its eternal Moroccan competitor Dolidol could turn to the advantage of Richbond. "The bedding market was previously dominated by the Lebanese. The arrival of Dolidol has triggered a price war. We are now at a point where we can match the prices, while offering a slightly higher quality of foam," explains the director of the Tazi group.

The Moroccan group will therefore initially produce simple foam mattresses covered with fabric, which it markets for about 300 dirhams under the Dorelux brand.

"It's very low-end, but it corresponds to the current demand in Ivory Coast. It is unthinkable to associate the Richbond brand with these products that have not been produced in Morocco for 35 years. We will only use the Richbond brand when we sell mattresses from 800 dirhams", says Karim Tazi.

Although the factory is expected to be profitable within two to three years, Richbond's ambition is nevertheless to produce spring mattresses in the long term, to accompany the increase in purchasing power in Côte d'Ivoire, but also in the sub-region (Ghana, Mali, Burkina, Sierra Leone and Guinea). "For the Ivorian market, the factory is clearly oversized, we have seen wide in terms of expansion," says Karim Tazi.

Forced diversification

Is this a case of folie de grandeur? "The leap of faith is that the film that the group has experienced in Morocco, after the idea of the founder [late Abdelaziz Tazi, editor's note] to replace wool with foam for the manufacture of Moroccan lounges, can be replayed in West Africa, "explains his son, now in charge of development of the group.

A statement already made during the group's fiftieth anniversary, in 2015, marking the beginning of the group's diversification, both geographically and sectorally (outside industry). The Richbond Africa holding company has since been created in Casablanca Finance City to carry the activities of the parent company on the continent. Objective of the African subsidiaries: "to become captive customers of the group and thus approach the saturation of our Moroccan production tool, by exporting semi-finished products from Morocco".

"The Moroccan bedding market is not saturated. We have 26 stores under the banner 'L'Expert du sommeil' in which we sell our bedding products, and we continue to open one per month," says Karim Tazi.

"But we have the impression that if the state had wanted to kill the industry, it would not have done it differently. For 50 years, we have done nothing but industry, and we had a growth of 6 to 7% per year. Since 2012, growth is zero, especially because of the proliferation of informal and imports from China and Turkey, "he continues to justify "the need to diversify.

In addition to bedding, the Richbond group is also in plastics. ECRC, the oldest company in the group, manufactures products under the Atlas Plastics brand. The Ivory Coast plant will also serve as a trading platform for its plastic drawers and garden tables.

In Morocco, through its subsidiary Baltimar, Richbond also imports palm oil which it resells to industries for the manufacture of margarine, preserves and cookies. Richbond also uses this oil to produce a spread made from Moroccan almonds, which has been very successful in grocery stores. The group plans to expand it to mass retail.

But since 2013, Richbond has also invested in real estate. Its subsidiary Edifoncia is currently marketing its first real estate project, apartments near the port of Casablanca. Edifoncia is also expected to announce soon the name of the French manager of its apartment-hotels for business clients on Boulevard Bir Anzarane in Casablanca.

In Africa, Richbond could announce new investments in bedding during the year or at the beginning of next year. The only clue: "Southern Africa is not for tomorrow, because the South Africans are defending their turf.