Abstract
Abstract In Kenya, as in many other countries in the Global South, there is a growing population of so-called middle-income consumers that buy products from supermarkets. The increasing number of supermarkets in Kenya that serve these customers have become a potentially important market channel for domestic food processors. This paper identifies the barriers that domestic food processors encounter to accessing supermarkets within Kenya. It is based on survey data from 48 food processing firms that was collected in 2013–2014 and a set of two in-depth interviews conducted among selected firms in 2015 and 2016. The findings indicate that it is difficult for processed food products from Kenyan-owned firms to enter the domestic ‘modern’ retail sector. A combination of stringent entry and markets barriers such as strict legal requirements and licenses, unfair competition, and lack of capital means it is an onerous task to survive in the presence of cutthroat competition from imported food products. The food processing firms interviewed often view the emerging supermarket sector as offering promising new outlets for their products but also point to a number of entry barriers, typically concerning resources and the qualification requirements of domestically owned supermarkets. These requirements are primarily related to pricing and payment terms that are difficult for most interviewed food processors to comply with. Other barriers include standardisation, regulations and infrastructure. An overreliance on the largest supermarket chains has led to harsh competition among Kenyan food processors. While some struggle for mere survival, others have to refocus on smaller supermarkets and convenience stores.
Highlights
Food production, processing and distribution play an important role in sub-Saharan African economies
While prior research has mainly identified barriers for fresh food suppliers entering into global value chains, which are commonly set by global buyers, this paper explores barriers to value-added processed products in the Kenyan domestic market, as outlined above
This paper has explored the attempts by Kenyan food processors to supply domestic ‘modern’ retail sectors
Summary
Food production, processing and distribution play an important role in sub-Saharan African economies. An increasing number of studies have explored the challenges for African food products in entering global chains and markets these industries. Entry barriers to global value chains (GVCs) for food suppliers are commonly seen as being on the rise, and as almost without limit (e.g., [6,14]). This paper focuses on domestic market sales of African-owned food processors in Kenya’s. It deals with entry barriers that Kenyan food processors meet when attempting to reach market outlets. Though Kenyan middle-income consumers have been steadily rising in numbers, and a lucrative market exists, the paper shows how ‘modern’ retail formats are difficult to reach for domestic food processors. The paper identifies a number of entry barriers, such as capital requirements and standards compliance that affect domestic food processors’ ability to sell to supermarkets
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