Global soft drinks giant PepsiCo has started local production of its brands, raising the competition bar for Coca- Cola, which has dominated the Kenyan market for decades.
The company has been relying on imported drinks after making a re-entry into the Kenyan market in 2010 following an exit in the 1970s.
The general manager for Kenya, Butch Moldenhauer, told the Business Daily on Monday that the manufacturer started producing soda at its local plant eight days ago.
“We started production with our local plant about eight days ago, this will help us to supply the market for the next two years as we plan further expansion,” he said, but declined to reveal the capacity of the new plant.
PepsiCo expects to cut operating costs with the new plant given that it had been relying on imported products to serve the local market.
The company has invested to a tune of Sh2.4 billion in the local plant as it seeks to capture growing demand for soft drinks in the Kenyan economy, which has grown steadily over the last decade increasing consumers’ disposable incomes.
READ: Pepsi hires staff ahead of Sh2.4bn plant roll-out
This growth has buoyed the sector, making producers to raise production to 472,005 tonnes per year in 2011 down from 230,750 tonnes in 2006, the Kenya National Bureau of Statistics (KNBS) data shows.
PepsiCo has been importing products like Pepsi Light, Mirinda, Mountain Dew, 7UP and Everess through its agent, Seven-Up Bottling Company Kenya (SBC Kenya).
The move is expected to eat into the market share of Coca-Cola that has enjoyed minimal competition enabling it to firm its grip on the region for decades.
Coca-Cola is gearing up for the rivalry with a Sh5 billion investment, to be spread over three years, to help boost capacity of its seven Kenyan franchises and expand its juice products.
ALSO READ: Soda companies slash production as demand falls
In July 2012 one of the franchises, Nairobi Bottlers, commissioned a Sh1.6 billion plastic bottling line at its Nairobi’s Embakasi site, which is expected to increase capacity to 52,000 bottles from 24,000 bottles per hour. PepsiCo advertised in October 29 positions of middle-level managers as part of a target personnel of 300.
The positions include area sales managers, a human resource manager, public relations officers, and senior accountants among others.
The company had been facing the problem of illegal importers as PepsiCo had not satisfied demand with its imports.
PepsiCo acquired 14 acres of land at Nairobi’s Ruaraka estate through Seven Up Bottling Company (SBC) Kenya Ltd, a franchise bottler and distributor of Pepsi products it bought in 2009.
Mr Modenhauer said he was optimistic on the outlook of the Kenyan market despite a slump in sales in 2012 that made Soft drink makers to roll back production.