Soft drinks production in Kenya up 5.8% year-over-year in the three-month period to March to 109,707 tonnes amid rising demand, opening of PepsiCo plant, according to government statistics

KENYA , July 7, 2013 () – Rising demand and the opening of PepsiCo plant has reversed the drop in soda production in the first quarter of the year.

Kenya National Bureau of Statistics (KNBS) data shows that production of soft drinks increased 5.8 per cent to 109,707 metric tonnes in the three months to March compared to a flat market in the same period last year.

The largest producer of soft drinks in the Kenyan market, Coca-Cola, linked last year's drop in production to consumer shift to fresh fruit juices and high inflation in the first half of 2012, which reduced disposable incomes. Coca Cola said there was an upturn in demand in quarter one, when giant PepsiCo has started local production of its brands that were since its re-entry into the Kenyan market in 2010 been imported.

(Read: PepsiCo cuts its prices in battle with Coca-Cola)

Demand

"The market which has stabilised from effects of high inflation made us address consumer needs by rolling back prices in the first six months of 2012," Coca-Cola East Africa general manager Peter Njonjo told the Business Daily before the release of the KNBS data.

Coca-Cola cut its prices from Sh25 for the 300ml soda to Sh23 in June 2012 to raise consumption of its soft drinks when inflation that ranged between 18 per cent and 10 per cent reduced the consumers appeal for non-basic items like soft drinks. The cost of living measure has dropped to 4.91 per cent and 3.67 per cent this year.

Ready-to-drink juice makers like Kevian Kenya which sells the Pick N Peel brand and Delmonte among other smaller players have munched soda's market share. Coca-Cola is seeking a piece of this market with its Minute Maid fruit juice brand. KNBS does not currently capture the production trends for fruit juices.

Analysts reckon that the opening on PepsiCo's Sh2.4 billion plant in Ruaraka in late December has had an effect on the production of soda.

(Read: PepsiCo starts search for distributors)

PepsiCo relied on imports of brands like Pepsi Light, Mirinda, Mountain Dew, 7UP and Evervess, which were not captured by KNBS in soft drinks production segment. Importation being a costly affair as opposed to local production, PepsiCo set up base in Nairobi to produce its soft drink brands.

PepsiCo's Nairobi plant ushered in a vicious battle for control of the market as PepsiCo seeks to cut the dominance of Coca- Cola in Kenya.

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