Innovation drives growth in Kenya’s staple food market despite COVID-19 restrictions, price hikes

KENYA – The unique challenges brought by the pandemic forced many consumers to adopt new purchasing behaviour which further made many manufacturers to adjust their operations to meet consumer preference and drive sales.

In Kenya, the staple foods market grew to an estimated US$ 1.05 billion in 2021 compared to US$ 994 million in 2020 and is expected to reach USD 1.5 Billion by 2026, according to global market research company Euromonitor International.

The growth in the market was driven by jump in retail volume and value sales of staple foods thanks to more innovative products being introduced.

For instance, to meet consumers’ need for more affordable staple foods, companies focused on the production of smaller pack sizes to cater for consumers in the lower income groups and for those whose incomes were lost or declined as a result of the impact of COVID-19.

Also, companies invested in new product development and introduced new products to food staples that attract consumers, resulting in increased competition, especially products with a healthy positioning.

“Consumers are turning to healthier staple foods such as fresh fruit and vegetables as opposed to processed fruit and vegetables,” highlighted the report.

Further to that, manufacturers improved their current stable of staple foods by adding a range of new flavours to current lines and are incorporating new tastes like ginger.

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To push sales, many brands offered promotions on food staple, with some reducing prices, while others offer complementary products, and others still increasing the quantity of the product, keeping the unit price stable.

These strategies which are expected to still take centre stage in the coming years, have ensured the staple food market grew healthy despite the COVID-19 restrictions and government policies which led to an unstable economy and increasing food prices as a result of hiked taxes.

According to Senior Analyst, Anje du Plessis, “We expect companies to focus on manufacturing healthier staple foods with nutritional benefits in 2022, as well as concentrating on the fortification of their products.”

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Furthermore, brands are expected to offer price promotions and discounts on their products as a strategy to remain competitive in addition to offering smaller pack sizes to make staple foods more accessible to low-income consumers.

Many staple food players are likely to start offering their products through e-commerce platforms, with the channel expected to increase its value share during the forecast period.

In addition, manufacturers are likely to improve their marketing strategies to increase sales and make greater use of social media to create awareness of their brands.

EAC agrees to 35pc duty on imported finished products under revised CET

In other related news, Imports to the East African Community (EAC) are now set to attract a maximum tax of 35 per cent after all partner states settled on the Common External Tariff (CET) on fourth band products, effective July 1 2022.

Goods in this band include dairy and meat products, cereals, edible oils, alcoholic beverages, fruits, nuts, sugar and confectionery, coffee, tea and spices, among other consumer goods.

As a result, Burundi, Kenya, Rwanda, South Sudan, Uganda and Tanzania will slap importers with higher tariffs on the affected goods.

The current maximum CET for goods that are imported into the Community is 25 percent. The new levy is higher than the 30 or 33 per cent tariff that was earlier proposed by the Partner States.

The CET is one of the key instruments under the Customs Union pillar which justifies regional integration through uniform treatment of goods imported from third parties.

The move is set to spur intra-regional trade which currently stands at US$18.9m by encouraging local manufacturing, value addition and industrialisation.

It will also address the requests for stays of application which distort the CET that was enforced in 2005.

The EAC CET is currently structured under three bands of 25 percent for finished goods, 10 percent for intermediate goods and 0 percent for raw materials and capital goods.

Besides safeguarding locally produced goods, the proposed CET will attract new investments into the region.

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