Business
Kenya under increasing pressure to brand its tea
Last year, Kenya produced 345 million kilogrammes of tea, much of which was exported and used to blend inferior brands in other countries.
Posted Monday, June 8 2009 at 00:00
KTDA produces an estimated 62 per cent of all tea from Kenya, while the rest comes from mainly multinational companies like Sasini and Unilever, who are also exporters.
But appreciating the higher benefits from processed tea, KTDA is exploring prospects of strategic partnerships with investors in Hong Kong and Dubai.
While Hong Kong is the gateway to the Chinese and Far East markets, Dubai is an entry point to the Gulf region.
Both have vibrant economies. Here, the agency will enter into an agreement to supply the produce while the investor will do the processing.
Mr Mbui said that Russia is another huge market but has been ruled by an open credit system that is not conducive to business, especially in a volatile economic situation. There have also been complaints of Russians defaulting on payment prompting tea dealers to avoid the market.
Previously, India was a major supplier of tea to Russia through a 120-day credit system, but bad experiences with payments prompted Indians suppliers to renegotiate the arrangement.
Said Mr Mbui: “The pressure by the Indian exporters has worked in our favour and Russian importers are becoming more open to our requests for shorter term credits.”
But even as the agency seeks strategic partners, Mbui admits that Kenya needs to work towards doing its own processing as a long-term business strategy.
“We would require less than five years to recoup the initial capital and market the brands. After that we would be up and running, earning double the current revenues for our tea,” said Mr Mbui.
But there are fears that some of the existing top players in the tea trade may not welcome newcomers into the market. According to a source, there are indications big players would organise boycotts just to fend off new entrants.
However, Mr Kamau says that while such an eventuality cannot be ruled, the quality of Kenya tea should be able to stand the test.
“They might refuse to buy for a year, but would finally relent because we have a good product,” he said.
On several occasions, Kenya’s Agriculture Minister William Ruto has argued for branding of the country’s tea as the way to realising full financial benefits in the world market.
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