Kenya Food and Drink Report Q3 2012

The dynamics of a stronger currency, tight monetary policy and improved weather conditions suggest that domestic demand conditions should remain reasonably healthy in 2012. While the lagged impact of tighter monetary conditions could start to bite, we do not believe that this will bear a substantial impact on consumption spending in the coming quarters.

The Kenyan consumer-facing sectors are showing tremendous long-term promise. Although Kenya is not clearly distinguishable from its neighbours Tanzania and Uganda in terms of GDP per capita, Kenya’s consumer sector is significantly more developed than these countries. The domestic food and drink processing industry is much stronger, and internal trade systems are more developed, with organised grocery retail outlets much more widespread. Following a challenging two-year period over 2008 and 2009, as post-election violence and then a sluggish economy reined in private consumption after a period of accelerated growth, Kenya is much more integrated into the global economy than the rest of the East African Community (EAC). Kenya is the EAC’s economic hub and its most developed consumer market.

Our strong Kenyan view is also backed up by the fact that we believe companies can more efficiently reach the end-consumer market in comparison with Tanzania and Uganda. Internal trade systems are stronger, with mass grocery retail contributing an estimated 5% to consolidated grocery sales compared with a non-Kenyan East African average of about 1%.

Headline Industry Data

Per capita food consumption is forecast to increase by 13.0% in 2012. To 2016, we are forecasting a compound annual growth of 10.6%.

Mass grocery retail sales are forecast to increase by 29.2% in 2012. To 2016, we are forecasting a compound annual growth of 31.6%.