A PepsiCo bottling plant in Ruaraka, Nairobi. Competition in the Kenyan soft drinks market went up a notch higher last year following the opening of the factory. PHOTO by Salaton Njau
What you need to know:
Output up 25pc between January and July this year compared to a similar period in 2012
Data from the Kenya National Bureau of Statistics (KNBS) shows that production of soft drinks, which mainly comprises soda and juices, stood at 258,236 metric tonnes, compared to a similar period in 2012.
Production of soft drinks has jumped to a record high in only the first seven months of the year, marking an upturn in fortunes for manufacturers who recorded a flat growth last year.
Data from the Kenya National Bureau of Statistics (KNBS) shows that production of soft drinks, which mainly comprises soda and juices, has gone up by 25 per cent between January and July to stand at 258,236 metric tonnes, compared to a similar period in 2012.
July was also a record production month for the soft drinks industry, in which output went up from 27,864 metric tonnes in June 2013 to 61,802 metric tonnes, according to the latest KNBS economic indicators report.
Production of soft drinks had hit a previous peak in 2011, when the annual total stood at 371,352 metric tonnes (218,231 MT to July), but went down in 2012 to a full year total of 359,518 metric tonnes.
The largest producer of soft drinks in the Kenyan market, Coca-Cola, linked last year’s drop in production to high inflation in the first half of the year which cut consumers’ disposable incomes. Increased consumer choice and aggressive marketing of fresh fruit juices have also slowed down consumption of fizzy drinks.
Competition in the Kenyan soft drinks markets went up a notch higher last year following the opening of a Nairobi bottling factory by PepsiCo, Coca-Cola’s global rival.
Local market
PepsiCo had previously relied on imports to supply the local market, which did not count towards local production numbers collated by KNBS.
The imported soda was also costly for consumers compared to alternatives offered by the competition, thus lowering volumes sold.
PepsiCo opened a Sh2.6 billion plant in Nairobi’s Ruaraka area at the beginning of the year, enabling it to offer its sodas at lower prices than was the case when all products for the local market had to be imported.
PepsiCo’s Nairobi plant is producing Pepsi-Cola, 7-Up, Mirinda Fruity, Mirinda Orange and Evervess.
Coca-Cola, on the other hand, announced it would put in a Sh2.6 billion investment spread over three years to boost the production capacity of its seven Kenyan franchises and deepen the reach of its juice products.
The increased production of soda signals a rise in consumption, with customers now enjoying lower soda prices compared to the first half of 2012, due to competition for market share between Coca Cola and PepsiCo.
PepsiCo stirred the market further upon commencement of local production by offering 350 millilitre bottles of soda at Sh23, the same price of Coca Cola’s 300 ml offerings.
Coca-Cola had earlier cut its prices from Sh25 for the 300ml soda to Sh23 in June 2012 to raise consumption of its soft drinks, at a time when demand was threatened by inflation which had ranged between 18 per cent and 10 per cent in the first six months of 2012.
The rate of inflation has since gone down from the second half of 2012, touching a low of 3.2 per cent in December.
Inflation up to July 2013 touched a high of 6.02 per cent, having been below five per cent for the first six months of the year, translating into more disposable income for Kenyans to spend on non-basic goods.
