Detectives from the Directorate of Criminal Investigations (DCI) on Friday afternoon impounded over 7,000 cartons of smuggled milk at a godown in Kisumu.
The move comes two days after President Uhuru Kenyatta ordered a crackdown on smuggled milk in the country, a measure aimed at enhancing fair trade and addressing the plight of local dairy farmers who have incurred millions of losses.
Kenya is believed to be one of the leading markets of the Lato milk brand in the East Africa region.
The officers laid ambush at the Mustys Distributors Limited facility on Sabuni Road and found thousands of cartons of Lato milk.
The DCI officers from Nairobi had demanded to see what was stored in the go-down catching the workers unawares.
The detectives also found at the scene, a lorry believed to have been transporting the counterfeit product.
According to one of the detectives, who did not want to be named because he is not authorised to speak to the media, the milk is imported in powder form and later repackaged as Lato.
The officer said the milk is believed to originate from Australia, then it shipped to South Sudan before getting into Uganda and finally Kenya.