Nakumatt financial distress has filtered into the market, affecting movement of premium tea brands, Gold Crown Beverages said yesterday.
Peter Kimanga, a Gold Crown director, said sales of their 27 health and wellness products had “gone down remarkably” since the retailer started experiencing financial problems.
However, he said the firm’s flagship brands Kericho Gold and Baraka Chai have not been affected much since they are well stocked in other outlets.
“Most of these premium products are preferred by high end consumers who, with due respect to other outlets, have preferred shopping at Nakumatt. But since it started experiencing problems orders have been dwindling,” he said, adding that the retailer has cut orders by at least 20 per cent.
“The supermarket chain has also had a wide reach and even helped us penetrate regional markets such as Rwanda and Uganda with our lifestyle products. They also run loyalty programmes where shoppers earn points, which is attractive to the consumers of our high-end brands,” he added.
But Mr Kimanga expressed optimism that since the products had been introduced into the market, they would get other suppliers to distribute them.
Nakumatt last week shut down three branches in Uganda as rent arrears piled.
The retailer was expecting a six-week phased injection of Sh7.7 billion from an unnamed private equity fund beginning March, but failure to secure the funding has caused widespread product stock-outs and seen it delay employees’ pay.
Mr Kimanga said value addition efforts in the sector were bearing fruit, with their products now doing well in the region. Other countries where Gold Crown exports packed tea are Ukraine and Russia as well as Somalia and Sudan consumed by foreigners working.
“Somalia used to buy low quality teas but now they are ordering premium brands due to relative tranquility being experienced in the country and high number of foreigners working there. We export at least 10 containers or 50 metric tonnes of packed tea per month to the country,” he said.
Mr Kimanga, however, noted that payment of value-added tax on tea meant for packaging had worked against value addition efforts by local tea packers.
Kenya exports 95 per cent of its tea while only five per cent is consumed locally.
Meanwhile, average prices at the Mombasa tea auction on Tuesday increased marginally to $2.87 compared to $2.81 last week. Volumes of tea sold on this week rose to 8,303,201 from 7,960,652 last week.