Successful selling of consumer products in Kenya means intimately knowing both the size of your potential customers and how to reach them effectively.
With consumption levels rising in Kenya, the possibility of selling to the East African country continues to attract international and local companies of all sizes.
There are many success stories of companies who have made it in Kenya. And while yours may be excited by the opportunity to establish an effective route-to-market strategy for products or services, you may also be daunted by the steps to actually achieve this goal.
Hard nut to crack
From our experience researching and writing on opportunities in the Kenyan market and the successes of many companies and entrepreneurs doing business there, we have gained valuable insight into some of the effective ways of entering the market.
For all its business and investment potential, the country can be a hard nut to crack. Take the troubled forays of South African businesses in the past. The lesson companies can learn from their experience is to both do thorough research and adopt informed approaches.
So, how can your company access this market sensibly and cost-effectively? One viable option is using distributors with established networks. The rise of a strong private sector is well-documented in Kenya – thousands of small and medium-sized companies have quickly grown to become legitimate players in their respective industries. They provide a wide pool of prospective business partners for suppliers and manufacturers looking to reach consumers both in the country and the wider East African region.
The distribution services sector include a few large supermarkets, a good number of medium-sized wholesalers and retailers and thousands of independent and often informal small retail shops (kiosks) and street vendors (hawkers). Informal trade happens in both urban and rural areas, but the sector is modernising quickly, especially with the development of formal retail outlets such as shopping malls.
Steps for success
How big is the demand?
First determine the size of the demand for your product or service? What might sell well in Nigeria or South Africa can fail miserably in Kenya as consumers here tend to focus on value for money, and origin of goods. Also, study competitors and evaluate the uniqueness of your product or service.
What are the legal requirements?
Kenya’s government has imposed restrictive trade policies for some products such as maize and tea that are meant to develop and protect specific local industries. Find out if any such regulatory requirement affects your product or service. Additionally, know the product standards and accreditation, and labeling and marking requirements. The Kenya Bureau of Standards (KEBS) is responsible for regulating and standardising quality of all imported and locally manufactured goods. Identify potential difficulties. For example, the KEBS mandatory Pre-shipment Verification of Conformity to Standards Programme (PVoC) is reportedly time-consuming and expensive.
Who are the key distributors?
There are many ways to identify legitimate players in your industry including relevant online resources, local industry associations and chambers of commerce and investment promotion agencies.
Some of the top distributors in the FMCG sector include Hasbah Kenya (for Procter & Gamble), Mahitaji Enterprises, RAA, Adamji Multi Supplies, Mars; Modern Holdings EA, Debenham & Fear and Zenco.
The typical product distribution chain has five links: manufacturer–agent–distributor–stockist–customer. For example, South African liquor company Distell supplies local agents Distell Winemasters who supplies distributor Mwalimu Wines & Spirits. Mwalimu then sells to stockists Checkered Check who in turn sells to bars and such outlets.
However, according to Job Ireri, of Distell Winemasters, with the rapid growth of big retailers such as Nakumatt, distributors are increasingly being locked out of the supply chain as more operators adopt vertically integrated business models.
Like in most African countries, the last mile of logistics is a challenge for many operators in Kenya. However, established players have their ducks in a row. “Many big distributors of beverages and other fast-moving consumer goods have countrywide reach. Some firms have established depots in strategic regions and employed sub-distributors,” says Ireri.
The sourcing pool for potential distribution partners is wide and new companies are constantly emerging, as the competition for competent local partners heats up. As a supplier or manufacturer, you must have a clear picture of the preferred and suitable business partner based on your company’s objectives and goals. Similarly, Kenyan distributors have criteria when considering potential suitors. Below are some of the top issues that emerged from our talks with executives at various distribution companies:
- Distribution agreements – the manufacturer or supplier should be willing to discuss a fair agreement that covers the interests of both parties.
- Due diligence – be forthcoming with information that can enable a proper and efficient due diligence process. This will also help to establish trust and good faith.
- Training and incentives – thorough training on product is critical, and so is offering incentives and support for marketing plans.
- Payment methods – be open to explore payment options.
- Schedule visits – be willing to devote time for face-to-face meetings and allocate time to start building a close relationship.
- Relationship management – to ensure long-term sales, keep in close touch with the distributor and establish efficient technical and after-sales support