Report Highlights:
Good prospects exist for U.S. food ingredients in Kenya's food processing sector. However, business relationships with U.S. exporters are underdeveloped. This report gives a general overview of Kenya's food processing sector - the market structure, key distribution channels, competition and best product prospects.
I.Food Processing Sector In Kenya
Kenya’s Gross Domestic Product (GDP) stands at about US $14.6 billion, making it the most developed economy in East Africa with an estimated population of 32.2 million people and per capita income of US $239.Due to its geographical location and industrial development (small but sophisticated), Kenya is the trade hub for the East and Central African region.Kenya has a relatively well-developed agro-processing industry ranging from processing staple food and fruits, to beverage and tobacco production for both domestic and foreign markets.However, this sector is capital intensive and relies on imported inputs.Food and beverages make up over half of Kenya’s exports mainly to the neighboring countries.Traditional suppliers from European Union are the main source of Kenyan imports supplying over 32 percent. The industry faces increasing competition from imported substitutes both in price and quality.The sector is constraint by power shortages and failure, unreliable water supply, deteriorated infrastructure, high interest rates for short and medium term borrowing, excessive government regulation and red tape, to mention a few.Hence, the increased cost of doing business in Kenya.
Kenya’s food and beverage processing industry comprises more than 1,232 businesses.Agro processing is progressively the largest manufacturing sub sector accounting for 13 per cent of total manufacturing output (the last full year for which statistics are available).The businesses range from small family-owned businesses to large businesses listed on the Nairobi Stock Exchange and subsidiaries of foreign or multinational businesses. Major multinationals have established operations in Kenya as foreign companies or as joint ventures with Kenyan shareholding to supply the domestic and neighboring markets.These include Nestle, Unilever, Cadbury, Coca Cola, and Wrigley.The companies produce the same high standard of their products that are well known around the world.Most businesses serve very localized markets while a few, medium to large businesses dominant the market on a nationwide basis.
Kenya’s food and beverage industry is composed of the following key production sectors: dairy and meat products, bakery goods, grain milling, edible fats and oils, beverages, fruits and vegetables processing, fish processing, wines and spirits.