EXPORTER GUIDE ANNUAL

An Expert's View about Food , Beverages and Tobacco in Kenya

Last updated: 5 May 2011

Of the 39 million Kenyan consumers, only an estimated 2-4 million can afford to buy consumerready foods. FAS/Nairobi forecasts Kenyan imports of consumer-ready foods at $121 million during calendar year 2010, with the United States supplying ten percent of the total, mostly through consolidators.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 03/02/2010 GAIN Report Number: Kenya EXPORTER GUIDE ANNUAL Update Approved By: Stephen Hammond Prepared By: Souleymane Diaby/Carol N. Kamau Report Highlights: Of the 39 million Kenyan consumers, only an estimated 2-4 million can afford to buy consumer- ready foods. FAS/Nairobi forecasts Kenyan imports of consumer-ready foods at $121 million during calendar year 2010, with the United States supplying ten percent of the total, mostly through consolidators. Post: Nairobi Executive Summary: SECTION I. MARKET OVERVIEW 4 4 Estimate Forecast Economic Trends 2006 2007 2008 2009 2010 1 Population (Millions) 36 37 38 39 40 1 Population Growth Rate (%) 2.9 2.9 2.6 2.7 2.7 1 Formal Sector employment (1,000) 1,858 1,910 1,944 1,800 1,900 1 Informal Sector Employment (1,000) 7,069 7,502 7,935 8,000 8,100 1 Public Sector Employment (1,000) 650 628 638 580 560 1 Unemployment rate (%) 35 40 40 42 43 1 Total GDP ($ Billion) 22 27 31 27 28 2 GDP per capita ($) 637 780 711 692 700 1 GDP growth rate (%) 6.3 7.1 1.7 2.5 3.5 1 Inflation (%) 14.5 9.8 26.2 20.0 17.0 1 Exchange Rate (Kshs/US$) 72.10 67.32 69.18 75.50 75.00 Agricultural Products Imports Total Imports of Agricultural Products from the World 3 ($ million) 734 1,059 1,394 1,350 1,320 Total Imports of Agricultural Products from the 3 United States ($ million) 46.7 84.8 76.6 130.0 115.0 Total Imports of Agricultural, Fish and Forestry from 3 the United States ($ million) 46.7 84.8 76.6 130.1 115.1 Total Imports of Consumer-oriented foods and Edible 3 Fishery products from the United States ($ million) 5.89 13.58 17.89 13.16 11.88 1 2 Sources: Kenya National Bureau of Statistics (Economic Survey 2009), Euromonitor 3 4 International, Global Trade Atlas (GTA) and FAS/Nairobi Estimates. Economic Situation The World Bank projects Kenya?s economy to grow by 3.5 percent in calendar year 2010 after registering 2.5 percent growth in 2009 and 1.7 percent in 2008. Slow growth in the services and construction sectors, and continued decline in the agricultural sector will likely mean continued slow growth when compared to other countries in the region. All sectors experience high costs due to poor infrastructure, insufficient electricity and fuel, water shortages and political uncertainty. Despite the expected economic growth, poverty remains due to persistent drought, effects of 2008 post-election violence, high unemployment level, falling export earnings and global financial crisis. In addition, the Kenyan shilling (Ksh) will likely remain weak during the first half of this year, exchanging at between Ksh 75 and Ksh 78 against the U.S. Dollar. Consumer-Oriented Foods and Edible Fishery Products Kenyan imports of consumer-oriented foods including fishery products reached a record $164 million in 2008. However, imports contracted in 2009 and we are estimating a further decline in 2010. Europe, South Africa, the United States, Tanzania and Egypt remain the major suppliers to Kenya. Key Demographics According to Euromonitor International, an estimated 1.5 million consumers between 40-44 years of age had the highest incomes in 2007, with 34 percent earning $1,500-$7,500, and 3.4 percent making more than $10,000. Most of these consumers live in the major urban centers of Nairobi, Mombasa, and Kisumu, and make-up the core purchasers of consumer-ready products. Advantages and challenges facing U.S. food products in Kenya Advantages Challenges Kenya's geographical location, industrial Stiff competition from the Europe and development and membership in regional South Africa, and lower tariff rates for trading blocs (the East African Community regional trade-bloc member countries such and the Common Market for Eastern and as Egypt and Tanzania. Southern Africa) make it a major gateway for trade in the east and central African regions. Kenya has an expanding food retail sector Small market for consumer-oriented (supermarkets and hypermarkets) due to a products ? so small that U.S. products will growing urban middle class population and be purchased only by consolidators who exposure to western lifestyles. have developed market links in Kenya. A growing middle class and expatriate Food ingredients such as soy protein community in Kenya provide a niche market isolates compete with low price Chinese for U.S. food products. products. Imports enter the Kenyan market with a minimum of complication once they are accompanied by a Certificate of Conformity (CoC) issued by either the Société Générale de Surveillance (SGS) or Intertek International Ltd. SECTION II. EXPORTER BUSINESS TIPS Kenya?s consumer-ready products market is a ?consolidators? market. Kenyan wholesalers and retailers source their imported food products from consolidators sourcing in the United States, the Middle East, Europe and South Africa. U.S. food production and distribution companies do not have a direct presence in Kenya. Kenyan importers prefer direct contact (for example, establishing contacts at the annual Gulf Food Show in Dubai, email, fax and phone) with consolidators. Consolidators must send samples and product catalogues with prices to importers. Kenyan importers expect to be able to negotiate prices with the consolidators before placing orders for products. Kenyan importers/processors collaborate with U.S. trade associations (American Soybean Association/World Initiative for Soy in Human Health (WISHH), U.S. Dry Bean Council, USA Dry Pea and Lentil Council, American Peanut Council, U.S. Wheat Associates and U.S. Grains Council) to develop the market for U.S. food ingredients. Market development activities include in-country technical seminars, trade servicing visits and short-term specialized training in the United States. General Consumer Tastes and Preferences Kenyan food retailers stock a wide range of products to meet diverse consumer tastes and preferences. Availability of products within the supermarkets and the desire for convenience remain the major factors that determine purchasing decisions. Kraft Foods, Heinz, Post and Betty Crocker are some of the U.S. brands imported into the Kenyan market by consolidators. Food Standards and Regulations Please refer to FAS/Nairobi?s report: Food and Agricultural Import Regulations and Standards General Import and Inspection Procedures The Government of Kenya facilitates the importation of consumer-oriented products through the Certificate of Conformity (CoC). To obtain a CoC, the consolidator must satisfy the Kenyan import requirements as administered by the Société Générale of Surveillance (SGS) or Intertek International Ltd. companies. Once the consolidator receives a CoC, the importer must present the CoC to the Kenya Bureau of Standards (KEBS) with a request that KEBS provide the Import Standardization Mark stick-on labels for each product. SECTION III. MARKET SECTOR STRUCTURE AND TRENDS Food Retail Sector Kenya?s supermarket sector offers the best distribution channel for imported consumer-oriented products. Supermarket chains, Nakumatt, Tuskys, Uchumi and Chandarana dominate the retail food market, with sales estimated by FAS/Nairobi (2008 Retail Food Sector Report) at $1.8 billion annually. Kenya?s key food retailers identify the following market segments as the most important: ? Hypermarket chains with 50,000+ square feet of shelf space to stock a wide range of products; ? Supermarket chains with 15,000?50,000 square feet of shelf space to stock 70 percent of products found in the hypermarkets; and, ? Convenience Stores with less than 15,000 square feet of shelf space with only essential products. Retailers entice customers through a variety of product promotions and convenience services. They use 24-hour operations, customer loyalty shopping cards, and special offers. Local producers and importers of consumer-oriented products occasionally do in-store promotions, billboards, brochures and/or flyers to advertise products. For more information, please refer to the Retail Food Sector Report Food Processing Sector U.S. suppliers of food ingredients may find opportunities in Kenya?s food processing sector. Local production does not meet the processing industry?s demand in many of the food ingredients, including soy, corn, wheat and rice and their milled products. U.S. cooperators link Kenyan food processors with their members to supply the food ingredients. The market development activities by U.S. cooperators in Kenya and the east African region have increased the level of knowledge of U.S. food ingredients. Hotels, Restaurants and Institutions Kenya?s food service sector sources their products from consolidators/importers and local grocery outlets. SECTION IV. BEST CONSUMER-ORIENTED PRODUCT PROSPECTS Kenyan importers buy mixed-containers of products listed here below. Consumer-Oriented Products Market Product Market Imports 5-Yr Annual Import Key Market Category Size Import Growth Tariff Rate Constraints Attractiveness (2009) (Volume) (2005-2009) % (2010) % Over Market for USA Metric Development Tons Snack 1,123.4 $3,111,126 9.06 25 High landed Good growth Foods* costs potential Breakfast 326.4 $2,127,152 8.4 25 High landed Good growth Cereals cost potential Mustard 28.3 $131,523 Data not 25 High landed Strong growth available costs potential Mayonnaise 393.0 $2,342,384 25.16 25 High landed Strong growth costs potential Tomato 109.5 $161,192 17.76 25 No tariff Strong growth Ketchup preferences potential Peanut 124.5 $597,351 3.42 25 High landed Potential use in Butter costs quick recovery (Nut-based foods spreads) * Sweet and savory snacks (fruit snacks, chips/crisps, tortilla/corn, popcorn, pretzels, nuts, etc.) Source: Euromonitor International ? Report on Packaged Foods in Kenya Food Ingredients Market Product Market Imports 5-Yr Import Key Market Category Size -2009 (2009) Annual Tariff Constraints Attractiveness (Volume) Import Rate Over Market for USA Metric Growth (2009) Development Tons % % 1 2 Protein 216 $598,787 4 10 Competition U.S. Concentrates from low cost ingredients are and Textured suppliers such considered high Protein as China and quality Substances* South Africa 2 2 Wheat 825,000 $144,000,000 -13 25 Competition U.S. hard red from low cost winter wheat suppliers of considered high hard wheat quality and used for blending with cheaper wheat *No data available prior to 2006; only 4-Year Annual Import Growth 1 2 Sources: GTA and FAS/Nairobi Estimates SECTION V. KEY CONTACTS AND FURTHER INFORMATION Office of Agricultural Affairs Embassy of the United States of America United Nations Avenue, Gigiri P.O. Box 606 Village Market 00621 Nairobi, Kenya Tel: 254-20-3636340 Fax: 254-20-3636349 Email: Agnairobi@usda.gov Website: www.fas.usda.gov/itp/Kenya/Nairobi.asp Foreign Commercial Service Embassy of the United States of America United Nations Avenue, Gigiri P.O. Box 606 Village Market 00621 Nairobi, Kenya Tel: 254-20-3636424 Fax: 254-20-3636065 Email: nairobi.office.box@mail.doc.gov Website: www.buyusa.gov/kenya Kenya Bureau of Standards (KEBS) P.O. Box 54974 Nairobi, Kenya Tel: 254-20-600034/66 or 69028201/401/410 Fax: 254-20-609660/503293 Email: info@kebs.org Website: www.kebs.org and www.kenyapvoc.com Customs and Excise Department Ministry of Finance P.O.Box 30007 Nairobi, Kenya Tel: 254-20-715540 Fax: 254-20-718417 Website: www.revenue.go.ke and www.kra.go.ke Kenya Plant Health Inspectorate Service (KEPHIS) P.O. Box 49592 Nairobi, Kenya Tel: 254-20-884545, 882933, 882387, 020-3536171/2 Mobile: 254-722516221, 254-733874274 Fax: 254-20-882265 Email: director@kephis.org Website: www.kephis.org Department of Veterinary Services (DVS) P.O. Private Bag 00625 Kabete, Kenya Tel: 254-20-631383/2231/1287 Fax: 254-20-631273 Cell: 254-733783746 Email: dvskabete@dvs.go.ke Ministry of Health Public Health Department P.O. Box 30016-00100 Nairobi, Kenya Tel: 254-20-2717077 Fax: 254-20-2710055 Website: www.publichealth.go.ke SGS North America Inc. 236 32nd Avenue Brookings, SD 57006 USA Tel: 605-692-7611 Fax: 605-692 -7617 Website: www.us.sgs.com/ Intertek International Ltd. Tel: 305-513-3000 www.intertek-gs.com/contactintertek/namerica/ Kenya?s Key Trade and Demographic Information 1 Agricultural Imports From All Countries ($ Mil)/U.S. Market Share (%) ? 2010 $1,320/10% 2 Agricultural Imports From All Countries ($ Mil)/U.S. Market Share (%) ? 2008 $1,394/5.5% 1 Consumer Food Imports From All Countries($ Mil)/U.S. Market Share (%) ? 2010 $116/10.2% 2 Consumer Food Imports From All Countries($ Mil)/U.S. Market Share (%)-2008 $158/11.3% 1 Edible Fishery Imports From All Countries($Mil)/ U.S. Market Share (%) -2010 $5/0.10% 2 Edible Fishery Imports From All Countries($Mil)/ U.S. Market Share (%) ? 2008 $6/0.14% 1 Total Population (Millions)/Annual Growth Rate (%)-2010 40/2.56% 3 Total Population (Millions)/Annual Growth Rate (%)-2008 39/2.63% 1 Urban Population (Millions)/Annual Growth Rate (%) ? 2010 9.2/4.00% 3 Urban Population (Millions)/Annual Growth Rate (%) ? 2008 8.8/5.92% 4 Number of Major Metropolitan Areas 3 5 Size of Middle Class (Millions)/Growth Rate (%) 3/5.00% 3 Per Capita Gross Domestic Product($Mil) ? 2010 $700 3 Per Capita Gross Domestic Product($Mil) ? 2008 $711 1 Unemployment Rate 2010 (%) 43 4 Unemployment Rate 2008 (%) 40 3 Food Expenditure (expressed as a percentage of total consumer income ) 40% - 50% 4 Percent of Female Population Employed 30% 1 Exchange Rate (Kshs/US $) ? 2010 75.00/1 4 Exchange Rate (Kshs/US $) ? 2008 69.18/1 Sources/Notes 1 FAS Estimates 2 GTA data 3 Euromonitor International 4 Kenya National Bureau of Statistics 5 Industry Estimates Metropolitan area = Population in excess of 1,000,000 Kenya's Imports of Consumer-Oriented Products, and Edible Fish and Seafood Imports from the World Imports from the U.S. U.S. Market Share Kenya Imports ($1,000) ($1,000) (%) 2009 2010 2007 2008 2009(E) 2010(E) 2007 2008 2009(E) 2010(E) 2007 2008 (E) (E) Snack Foods (Excl.Nuts) 10,345 12,866 10,000 9,500 80 15 50 40 0.8 0.1 0.5 0.4 Breakfast Cereals 10,733 3,484 2,365 1,119 8,157 995 230 110 76.028.6 9.7 9.8 Red Meats, Fresh/Chilled/Frozen 1,661 1,416 1,000 1,000 0 0 0 0 0.0 0.0 0.0 0.0 Red Meats, Prepared/Preserved 216 155 160 200 0 0 0 0 0.0 0.0 0.0 0.0 Poultry Meat 0 1 0 0 0 0 0 0 0.0 0.0 0.0 0.0 Dairy Products 5,107 7,194 6,000 7,000 225 526 150 100 4.4 7.3 2.5 1.4 Eggs & Products 706 268 150 200 0 0 20 20 0.0 0.0 13.3 10.0 Fresh Fruit 5,392 7,229 5,000 4,000 0 0 0 0 0.0 0.0 0.0 0.0 Fresh Vegetables 4,875 8,575 3,500 3,000 371 1,413 20 20 7.616.5 0.6 0.7 Processed Fruit & Vegetables 5,031 5,188 4,500 4,000 455 582 300 250 9.011.2 6.7 6.3 Fruit & Vegetable Juices 3,905 3,473 2,400 2,000 34 2 0 0 0.9 0.1 0.0 0.0 Tree Nuts 3,209 1,502 1,100 1,000 187 175 200 150 5.811.7 18.2 15.0 Wine & Beer 9,236 11,524 7,500 7,000 0 0 150 130 0.0 0.0 2.0 1.9 Nursery Products & Cut Flowers 15,323 15,801 9,058 7,129 16 20 145 120 0.1 1.6 1.7 1.3 Pet Foods (Dog & Cat Food) 626 1,130 800 1,000 0 0 30 30 0.0 0.0 3.8 3.0 Other Consumer-oriented Products 46,252 77,662 70,000 65,000 3,932 13,972 12,000 11,000 8.518.0 17.1 16.9 Total Consumer- oriented Foods 122,976 157,847 123,110120,000 13,566 17,883 13,150 11,870 11.0 11.3 10.7 10.2 Total Fish and Seafood Products 8,245 6,354 5,500 5,000 9 965 0.11 0.14 0.11 0.10 Total 131,221 164,201 128,610120,900 13,575 17,892 13,156 11,875 10.3 10.9 10.2 9.82 Source: GTA Kenya?s Top 15 Suppliers of Consumer-Oriented Products (US$) Partner Country 2007 2008 2009 (Estimate) 2010 (Estimate) United States 13,565,800 17,882,725 13,150,000 11,870,000 South Africa 13,617,720 17,014,925 19,000,000 17,000,000 Netherlands 11,844,829 13,600,693 10,000,000 9,000,000 Ireland 8,156,849 12,988,230 10,000,000 7,000,000 Tanzania 10,168,510 10,914,431 7,000,000 9,000,000 Egypt 5,241,133 7,613,345 6,000,000 8,500,000 Italy 5,392,924 7,369,907 7,000,000 5,000,000 United Kingdom 7,160,978 6,708,124 4,000,000 3,500,000 Uganda 2,412,437 5,742,702 4,000,000 5,000,000 France 3,975,497 5,639,516 5,000,000 4,000,000 India 4,819,024 4,781,310 4,500,000 4,300,000 Germany 2,162,686 4,643,466 3,000,000 2,500,000 China 2,991,229 4,428,604 5,000,000 6,000,000 New Zealand 2,918,718 3,831,303 3,000,000 2,500,000 United Arab Emirates 4,377,192 3,545,613 4,000,000 4,500,000 Others 24,170,959 31,142,011 18,460,000 20,230,000 World 122,976,485 157,846,905 123,110,000 120,000,000 Source: GTA Kenya?s Top 15 Suppliers of Edible Fish and Seafood (US$) Partner Country 2007 2008 2009 (Estimate) 2010 (Estimate) Seychelles 3,123,005 2,754,891 3,500,000 3,200,000 Singapore 466,897 1,325,687 1,500 1,000 Tanzania 491,519 439,999 350,000 300,000 Japan 638,765 314,921 70,000 60,000 Spain 0 242,787 80,000 60,000 Netherlands 93,596 228,669 90,000 60,000 India 157,497 212,959 200,000 150,000 Norway 229,191 168,032 130,000 120,000 Oman 221,508 167,416 130,000 130,000 Yemen 22,348 99,659 35,000 30,000 Thailand 2,043,663 96,004 200,000 190,000 China 23,690 53,894 25,000 20,000 Morocco 0 47,766 0 10,000 Uganda 143,948 46,522 10,000 8,000 United Kingdom 86,932 38,552 80,000 64,000 Others 502,857 116,704 598,500 597,000 World 8,245,416 6,354,462 5,500,000 5,000,000 S GTA
Posted: 04 May 2011, last updated 5 May 2011

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