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GACHOKI: A case for branding Kenya tea for value addition

Branding is the most important objective of marketing process that holds the broad range of marketing functions together.

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by DAVID GACHOKI

Columnists30 May 2024 - 12:37
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In Summary


  • There is a seismic shift taking place in the world of business. The shift from selling to buying. This shift is enhanced, accelerated and caused by the rise of brands.
  • A brand name is nothing more than a word in the mind, albeit a special kind of word. The power of a brand lies in its ability to influence purchasing behaviour.

A huge wave of excitement was created by President William Ruto when he challenged the Kenya tea industry to brand Kenya tea to increase its visibility in the global market and label it with a mark of origin.

In the past, many have spoken about value adding by simply packing for export sales.

Value adding simply refers to an enhancement made by a company or individual to a product or service before offering it for sale to the end customer.

Branding is the most important objective of the marketing process that holds the broad range of marketing functions together.

Through marketing a brand is built in the mind of the prospective consumer. Building a powerful brand requires a powerful marketing programme.

Today most products and services are bought, not sold. Branding facilitates this process. The endorsement of a product, essentially its guarantee, is represented by the brand name.

There is a seismic shift taking place in the world of business. The shift from selling to buying. This shift is enhanced, accelerated and caused by the rise of brands. A brand name is nothing more than a word in the mind, albeit a special kind of word. The power of a brand lies in its ability to influence purchasing behaviour.

Value adding in tea can be achieved through blending, bagging (tea bags) and packing in small retail packages; branding and flavouring; trading in specialty teas such as orthodox, organic, green, herbal teas or instant; manufacturing of ready-to-drink tea; or selling, distribution and marketing.

Governments in tea-producing countries deliberately drive programmes to build vibrant tea value-adding sub-sectors to bring a chain of economic benefits to their respective countries. These include job creation, additional foreign exchange earnings, investments, technology transfer, higher export unit prices and, ultimately, poverty alleviation.

Governments offer incentives like concessionary financing for initial capital outlay, tax exemptions, market surveys and information, export promotions and facilitation of market access.

The President’s challenge was the most refreshing at the highest leadership level in Kenya in support of the tea industry and especially the tea farmer. It gave impetus to the ongoing tea reforms.

With Kenya being the leading tea exporter accounting for 25 per cent of all teas exported outside producing countries, it is sad that among the four leading global exporters that account for 71 per cent of global tea exports, Kenyan teas fetch the least in both export unit prices and absolute value.

This is largely because of lack of branding and value addition.

Just as an example in 2022, according to the ITC Bulletin of Statistics, Kenya exports only managed on average $2.6 (Sh343.23) per kg fetching $1,171,578 (Sh154.7 million) for its 450 million kilogrammes exported.

This compared poorly with China’s average price of $5.55 (Sh732.6) per kg fetching $2,082,579 (Sh274.9 million) for its 375 million kilogrammes exported.

Sri Lanka’s average price of $5.04 (Sh712.9) per kg fetched $1,245,028 (Sh164.4 million) for its 247 million kilogrammes exported.

And India’s average price of $3.57 (Sh471.3) per kg fetched $783,220 (Sh102.2) for its 219 million kilogrammes exported.

Here is the most disturbing thing of all, and no doubt what motivated the President to make his remarks about the tea sector:

While we are on average selling a kilogramme of tea at $2.6 being the equivalent of Sh338, the same teas fetch upwards of $10 per kg being the equivalent of Sh1,300 at the export destinations after branding.

In my last week’s article on 'The future threats to the global tea industry' I argued that the shifts in the global marketplace in the last 10 years where total tea imports grew marginally by only 0.9 per cent and the volumes by the top 10 importers dropping from 52.8 per cent to 43.7 per cent of total global imports, a whopping 17 per cent drop.

I added that 73 per cent of all Kenya tea exports go to some of these 10 leading global tea importers. This was against a global production growth of 29 per cent, much of it in low-quality, low-value teas that are impacting on all other teas. Kenya has rightfully been accused as one of the culprits.

Hongera Mr President. Kenya must wake up to build its own strong brands and cement its place in the global tea marketplace, for the sustainability of the tea industry. 

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