Unauthorised importers hurt Pepsi Cola sales in Kenya

What you need to know:

PepsiCo made its re-entry into the Kenyan market in late 2010 and has been relying on imports to serve the local market with its brands.
Importation being a costly affair as opposed to local production, PepsiCo decided to set up base in the country from where it will produce at least six of its brands.

International soft drinks manufacturer Pepsi Cola has been hit by parallel imports to the Kenya market in a business environment that has kept soda sales flat.

The soft drinks firm, which is set to commission a Sh2.4 billion plant in Ruaraka by end of the year, has said that unauthorised dealers and importers are distributing its products in Kenya and hurting local sales.

Currently, Pepsi feeds the Kenyan market with its products like Pepsi Light, Mirinda, Mountain Dew, 7UP and Evervess through imports by its agent Seven-Up Bottling Company Kenya (SBC Kenya).

“It has come to our attention that many importers and traders have been importing, selling and distributing trademark soft drink beverages of PepsiCo Inc and Seven-Up International in the Kenyan market,” said Butch Moldenhauer, the SBC Kenya general manager.

“SBC Kenya is the only company authorised by PepsiCo and Seven-Up International to sell and distribute soft drink beverages known and sold under the trademarks Pepsi Cola in Kenya.”

Competition

The production of soft drinks in the half to June dropped for the first time in four years after data from Kenya National Bureau of Statistics (KNBS) showed the production of soft drinks dropped from 189.7 million litres to 187.9 litres same period last year.

This was the first drop since 2008 when a weak economy and disruptions brought home by the bloody post-election violence hurt sales.

The flat market will usher in a vicious battle for control of market shares as PepsiCo prepares to cut the dominance of Coca- Cola in Kenya’s soda market with its Nairobi plant.

“We hereby request you to refrain from purchasing products from these unauthorised sources and support SBC Kenya Ltd,” the company noted.

Mr Moldenhauer said the company was on course to meet its target of commissioning the plant by year end in what is expected to heighten the competition for an already shrinking market.

PepsiCo made its re-entry into the Kenyan market in late 2010 and has been relying on imports to serve the local market with its brands.

Importation being a costly affair as opposed to local production, PepsiCo decided to set up base in the country from where it will produce at least six of its brands.

Opening of the plant is expected to increase competition in the sector.