NAIROBI, Kenya, Mar 18 – Kenya Tea Packers (KETEPA) is calling on the government to continue giving incentives to local firms to enable them stay afloat in challenging economic conditions.
Managing Director Tim Chege said on Thursday that the weakening shilling coupled with the high energy costs had pushed up the operating costs of many firms which are then passed on to the consumers.
"We are operating in difficult times and what we are doing is to try and keep the businesses afloat. Our company uses agro-products which have been affected by drought; we have high oil prices but the most worrying is the weak shilling. In light of this, we are appealing to the government to keep on offering incentives," said the MD.
The depreciating currency, he further admitted, had pushed up KETEPA\’s input costs. With only 10 percent of their sales being exports, this has not enabled them to balance out the high amount of money they spend to import packaging materials, he said.
If this state of affairs continues, it poses a double threat because consumers\’ purchasing power will also be impacted which in turn will affect the firm\’s sales and profitability, he feared.
While reinforcing the need for government\’s intervention, he acknowledged the impact that incentives such as the 250 percent capital investments allowance for firms operating outside Nairobi have had on their businesses.
Although the situation is stretching companies\’ margins, Mr Chege suggested that local firms especially the fast moving consumer goods companies should strive to stabilise the prices of their goods and services which can in turn enable them to push more volumes.
The MD said they have also embarked on value addition and diversification of their products to grow their business. The firm, which is owned by tea farmers through the Kenya Tea Development Agency and the Kenya Tea Growers Association, has moved from just packing tea to producing iced tea, flavoured tea and even bottled water as a way of meeting its consumer needs.
"We moved from our core business and we have decided that we are a total beverage company so don\’t be surprised if we launch another quality beverage," he hinted of more product launches in the course of the year.
Mr Chege spoke at a briefing where the company launched a promotional campaign where KETEPA will reward its customers as part of its celebration of 33 years in business. It is one of the largest tea blending and packaging companies in Africa and currently commands a 75 percent market share in branded black tea.
The campaigned will run in tandem with the recently announced price reduction on its flagship brand, \’Fahari ya Kenya\’.
"KETEPA brands are household names with at least eight out of ten Kenyan homes religiously consuming them. Besides rewarding our consumers, we will also be engaging our key customers locally and internationally," he said of the campaign that will run for three months.
Follow the author at https://twitter.com/cirunjoroge
