This archive report was first published on 1 September 2019.
Kenya's economic growth may be on the rise, but the reality on the ground is far from it. Despite growth numbers exceeding six percent, many Kenyans are struggling to make ends meet.
One of the main reasons for this is the increasing cost of living, with prices of consumables rising relative to its peers such as Nigeria and Ghana. According to a household survey by Kantar, a research consultancy firm, Kenya's average cost per item is up Sh0.50 compared to Nigeria and Sh0.20 compared to Ghana.
These rising costs have led to a shift in spending patterns, with Kenyans making fewer shopping trips than their counterparts in Nigeria and Ghana. The Kantar survey found that Kenyans make an average of 300 shopping trips per year, compared to 390 in Nigeria and 560 in Ghana.
Manufacturers and dealers of fast-moving consumer goods are taking note of these changing trends and adapting their packaging and delivery strategies accordingly. For instance, 80 percent of low-income households in Kenya spend on local brands that offer packs of at least 100 grammes, especially on home and personal-care products.
The trend towards bigger packs is driven by consumers seeking value in a market where many local brands are cashing in on the back of right price points. The price points of Sh5, Sh10, Sh50, and Sh100 are where the bulk of non-monthly purchases happen.
Consumers are also becoming increasingly savvy in seeking affordable but quality products, making the case for cheaper delivery channels. This has led to the growth of refill models, such as dispensers, which are becoming fashionable as businesses seek delivery channels that foster convenience and affordability.
One such example is the growth of fresh milk and cooking oil 'ATMs' in Kenya, which are not only helping create a friendly environment through cutting single-use plastic packaging but are also delivering affordable products to consumers battling against income that is trailing inflation.
Other companies, such as Unilever, are also exploring innovative ways to deliver affordable products to consumers. In the Philippines, Unilever unveiled shampoo and conditioner refilling stations that cut single-use plastic packaging and brought home affordable products.
Teaching consumers the right levels of product usage is also taking centre-stage in the quest for affordability. Examples include packs with dosage amounts automatically understood, such as Royco cubes, or ideas like the brand 'LESS', launched in the Netherlands by Eric Smeding, an 'intrapreneur'.
Reuse is also gaining currency in the aim for affordability. A coalition of firms, including Unilever, Carrefour, UPS, and TerraCycle, have come together to be part of LOOP, a global circular shopping platform designed to eliminate the idea of waste by transforming the products and packaging of everyday items from single-use to durable, multi-use packs.
Mr. Green Africa, a company that uses waste to manufacture products such as buckets and water tanks, has partnered with Unilever to recycle plastic containers and cut pollution. Unilever's products, such as Blue Band and Vaseline, are packaged in the recycled plastics, allowing cheaper packaging whose benefits are transferred to consumers in the form of affordable products.
Ultimately, there is a need for sustained joint efforts by stakeholders in manufacturing, retailing, and the government to drive sustainable new business and regulatory models that deliver affordable products and services that ultimately lift consumption of quality products and economic growth.
