Family Business Empires
Family-owned business are said to make up about two thirds of businesses worldwide. The simple reason being that when one ventures into business, you look for people you can trust and who you know will offer support without necessarily receiving immediate financial returns. Several successful family businesses in Kenya and many parts of the world have stories of small beginnings and big dreams that were realised and surpassed. We take a look at three very successful family businesses in Kenya and across the Ocean.
Chandaria Family
The roots of this highly successful family business are traced back to 1915 with the immigration of Saurashtria Chandaria to Kenya. Once here, he set up a wholesaler shop in Nairobi’s famous Biashara Street which steadily grew and amassed different assets and businesses. It can perhaps be said the catalyst for the growth of the business was the entry of the educated crop of the family to the business.
Manu Chandaria, Saurashtria’s son, went to the University of Oklahoma in the USA in 1950, where he pursued a bachelor’s degree in engineering and later a master’s degree in the same institution before embarking on a journey back home to grow his father’s business. Once back in Kenya, Manu’s future father-in-law had organised a group of ten individuals to acquire saucepan manufacturer Kenya Aluminium, an enterprise that had folded during the depression, from an Indian merchant in 1929, although this group eventually broke up to pursue different ventures some twenty years later.
Thus marked the beginnings of Comcraft Group the dollar billionaire corp. With the onset of the 1950s and 60s came the expansion of Comcraft to other countries such as Ethiopia, Nigeria, Congo, India, Zambia and elsewhere with Manu at the helm handling the business affairs in Uganda, and Congo.
Mahesh Chandharia who joined the family business in 1974, armed with an Economics degree from City University London in the UK, he brought professionalism, innovation and a whole new marketing approach. At the time, Chandaria Industries was a small Tissue Converting Operation. Eight years later, he became manager of the company and was determined to take it to the next level. However, for a good ten years, revenue stagnated. Mahesh then had an idea that would change the group’s history forever: to invest in a paper recycling project to make hygienic fabric, an innovation that had previously only been done in South Africa. And it was a success. In its wake, in 1995, Chandaria invested in the construction of a wadding processing plant in Tanzania. Its growth was such that, in 1999, the group acquired Tanzania’s largest producer of hygiene products, Tanpack Tissues Limited, followed by a paper mill, Garnett Papers, in Leeds, UK, which it sold four years later. Today Chandaria Industries is the largest Tissue and Hygiene products manufacturer in Kenya, East, and Central Africa.
Mahesh’s sons Darshan and Neer infused further growth to the family business. Darshan joined Chandaria group in 2009 when the company already had factories in Kenya and Tanzania. But his ambition went far beyond that, planning “to expand the group across the region”. Darshan quickly began to diversify into other business sectors, such as real estate with Chandaria Property (2013), which can be found in East Africa, the United Arab Emirates, the United Kingdom and India. Next, in 2014, came insurance, with the launch of a joint venture with Barclays Bank named Barclays Life Insurance Kenya, which quickly became a regional reference. That same year, the family became the majority shareholder of Mobius Motors, the continent’s leading producer of mass market vehicles, whose cars are entirely manufactured in Kenya. With one success story after another, the Chandaria group continues its far-reaching strategy, recently expanding its activities into the mining sector in Uganda. Having become CEO of the group two years ago, Darshan founded Chandaria Capital (a venture capital fund) in 2017, which is active worldwide and through which the group has already invested in twelve start-ups, including Kobo360 (Nigeria), Sokowatch (Kenya) and Doorsteps (United Kingdom).
Neer Chandaria, the youngest Director of the Chandaria Group holds an undergraduate Business Management degree from Brunel University in the UK heads up the Sales, Marketing & Business Development of Chandaria Industries in Kenya and Tanpack Tissues Tanzania, which are 2 of the group’s largest companies.
There are no signs of slowing down for this prolific family as the continue to innovate and evolve while keeping the family roots intact.
Wertheimer Family
The owners of the Chanel brand and all that comes with it, the story of how this family came to be at the helm of the most successful brand in fashion and beauty.
The family traces its business roots to the late 1800s when Ernest Wertheimer emigrated from Alsace to Paris and purchased the theatrical makeup company Bourjois, which developed the first dry rouge. Ernest's sons Pierre and Paul took over the family business in 1917. By 1920, the company was the largest and most successful cosmetic and fragrance company in France.
Pierre met Gabrielle "Coco" Chanel at some point in the early 1920s. The two became business partners and in 1924, Pierre entered into an agreement with Coco to create Parfums Chanel. Coco Chanel believed the time was right to take her fragrance Chanel No. 5 to a wider customer base. Previously it had only been available in her boutique. Chanel was aware of Pierre's expertise in retail, his familiarity with the American market, and his financial resources. For a 70% stake in the company, Wertheimer provided the financing for the production, marketing, and distribution of Chanel No. 5. For 10% of the stock, Chanel licensed her name to "Parfums Chanel" and removed herself from involvement in all business operations.
When Coco Chanel died in 1971, the family bought out her stake in the company.
Today, Pierre's grandsons, Alain and Gerard run Chanel. The brothers have been working for the fashion house for 43 years. They are the third generation of Wertheimers to run the more than 100-year-old company.
Gerard is based in Geneva, Switzerland. Alain lives in New York and has been credited with resurrecting the Chanel brand when he took over control of Chanel from his father in 1973. He was 25 at the time and convinced the board of trustees to let him take over the company. Alain and Gerard tapped one of the fashion industry's most famous creative directors, Karl Lagerfeld, to run the most famous brand in the world in 1983. Alongside the brothers, Lagerfeld took Chanel, which was then at its low point, and turned it into one of the most popular luxury brands in the world. In 2017, annual sales of Chanel's various product lines amounted to $9.62 billion. Despite this, they are two of the least famous fashion house owners. When they attend runway shows, they travel there in a modest French made hatchback and slip into the third or fourth row unnoticed.
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Waltons
The Walton family-business patriarch, Sam Walton founded the largest retail company Walmart. Sam Walton reportedly obtained a $25,000 loan from his father-in-law –to purchase his first retail store, which was a Ben Franklin franchise in Newport, Arkansas. He bought the store's name, fixtures and merchandise, signing a five-year lease on the building. His brother, Bud, joined him following his discharge from the army. His passion for retail led to the creation of Walmart. He opened the first Walmart store, Wal-Mart Discount City, in Rogers, Arkansas, in 1962, offering a wide variety of merchandise at discount prices in a no-frills setting. (In 2018 the company’s name was changed to Walmart.)
Large American discount store chains typically situated their stores in or near large cities, but Walton was convinced that even small towns could generate enough business to make such stores profitable. To operate in out-of-the-way locations, he situated a regional cluster of stores no farther than one day’s drive from a giant Wal-Mart warehouse that made large-volume purchases and distributed the goods to the stores using its own trucking services. Volume buying and a low-cost delivery system enabled Wal-Mart Stores to offer name-brand goods at discount prices in locations where there was little competition from other retail chains. As a result, the Wal-Mart chain experienced tremendous and sustained growth, with 190 stores by 1977 and 800 stores by 1985.
In 1983 Walton founded Sam’s Wholesale Club, a chain of deep-discount wholesale warehouse outlets, and in 1988 he began opening Supercenters, which added full grocery fare to the regular merchandise offerings and dwarfed even the barnlike Wal-Mart stores in size. By 1990 Wal-Mart Stores had passed Sears, Roebuck and Company to become the largest retailer in the United States. The next year the company began its international expansion with the opening of a store in Mexico. Growth continued, either through new stores or by the acquisition of established retailers, in countries such as Canada, China, Germany, and the United Kingdom.
Walton kept prices and salaries low but nevertheless inspired company loyalty in employees, who retired with comfortable pensions as a result of his profit-sharing plan. He stepped down as chief executive officer in 1988 but remained company chairman. By the time of his death in 1992, his company had established 1,735 Wal-Marts, 212 Sam’s Clubs, and 13 Supercenters with a total of 380,000 employees and annual sales of almost $50 billion. In the ensuing years, Walmart continued to grow, and in the early 21st century it was one of the largest corporations in the world.
Sam's eldest son Rob had joined the company in 1969. He held several positions within Walmart, including senior vice president, corporate secretary, general counsel and vice chairman. Before joining Walmart, he was a partner with the law firm Conner & Winters in Tulsa, Oklahoma. He joined the Walmart board in 1978 and, following his father's death in 1992, took over as chairman of the board of director.
The Waltons are the richest family in America thanks to their stake in Walmart, the world's largest retailer by sales. About half of Walmart's stock is held by seven heirs of founders Sam and Bud Walton. Heirs include Sam's three living children--Rob, Jim and Alice--his daughter-in-law Christy and her son Lukas, plus Bud's two daughters, Ann and Nancy. Rob Walton served as chairman for more than two decades and remains on the board, alongside current chairman Greg Penner, his son-in-law.
The running themes that you will see not only from these 3 family empires but a majority of others is how they have evolved from their humble ventures and beginnings by expanding geographically, evolving the business model, and expanding the business to other sectors or other kinds of revenue streams.
They live happily and hidden. While their wealth is certainly no secret, they don’t need the attention or go looking for it. Moreso for the Weitheimer brothers who are famously reclusive despite being in an industry where it is all about visibility. They focus on the boardroom and hire people to be the face of the brand in the form of famed designers and brand ambassadors.
The succession planning is evidently crucial and well executed in these empires which see the business grow and expand into the fourth and fifth generations which is no easy feat.
The incoming generations are well educated and have some experience that they bring into the business either from working within at an early age or from working elsewhere before re-joining the family business.
Ultimately, they treat the business like what it is, a business. Each and every member earns their keep in one way or the other and have a hand in the growth and running of the business.