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The supermarket-owned labels are gaining popularity in Kenya with these cheaper products creating competition with local manufacturers and well known brands/CFM

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Private labels gain root in Kenyan supermarkets

“Absolutely not, there are a certain people who will always buy brands; in fact Kenyans are brand loyalist, what’s wrong with a little competition? At the end of the day this is going to benefit the customer. If we look at the categories we have ventured into , it’s made other manufacturers more aggressive, in giving promotions, subsidising their prices, so everyone is targeting their own customer, the impact of us venturing into blue label is really small,” he stated.

The retailer targets Nakumatt Blue Label to account for 10 percent of their overall sales.

“The most developed private label market in the world is in the UK where their private label sales are about 40 percent of the overall sales, but that we won’t get there as Nakumatt because there are not enough manufacturers, and there is a lot of brand loyalty here, we want to get into most supermarket categories, whatever we can get, we will go for,” he explained.

Other retailers that have ventured into this include Tuskys, Ukwala and Naivas supermarkets, mainly packaging sugar, rice, bread, grains and maize flour.

However, Uchumi Supermarket has not taken this route, with Chief Executive Officer Jonathan Ciano saying Uchumi was established to promote entrepreneurship.

“If we went into branding we will be competing with the same suppliers; we may undercut small players,” he said.

He said that there is need to give small operators a chance to enter into the formal retail sector. He says the move will dampen the movement and growth of the respective industries.

Also opposed to the private label practice is the Consumer Federation of Kenya (COFEK).

Speaking to Capital FM Business, COFEK Secretary General Stephen Mutoro said Kenya is not ready for private label practice as consumers risk buying substandard goods.

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“Supermarkets should retain their work as we know them, to act as bridge between manufacturers and suppliers and customers or else the move could bring about losses of jobs and hinder growth of the manufacturing Industries,” Mutoro said.

Already the COFEK legal team is investigating whether the private label practice is legal and if the products are of standard quality.

Mutoro says that the federation will be lobbying the government to stop supermarkets from shelving their branded products and urged consumers not to buy Supermarket owned labels.

Commenting on this, Naivas Supermarket Business Development Manager Willy Kimani said that the practice is legal, and benefits both the consumer and the manufacturer.

“The consumer has a variety of choice according to his pocket, as well the manufacturer can now earn better than what he earns when he is trying to push his brand, since the cost of marketing and promotions has been lifted.

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