Sunday, February 3, 2013

Market share of edible fats on decline, survey show

By SUNDAY NATION REPORTER [email protected]

In a supermarket in downtown Nairobi, edible oils are more than edible fats. Of 17 brands of cooking oils on display a

In a supermarket in downtown Nairobi, edible oils are more than edible fats. Of 17 brands of cooking oils on display across 10 shelves, there are no more than five brands of edible fats and it is clear they are ceding ground.

The Sunday Nation’s observations are vindicated by a recent Consumer Insight report on consumption habits of Kenyans on cooking oils and fats.

In its findings, the research firm paints a picture of the demise of edible fats in the face of a more health conscious consumer.

According to Consumer Insight, the market is silently shifting towards cooking oils with five brands controlling about 46 per cent of the market.

Former market leaders Kimbo and Kasuku now jointly control 25 per cent of the market.

In 2005, Kimbo controlled 27.1 per cent of the cooking fats and oils market. Four years later in a similar survey, Consumer Insight reported Kimbo’s market share had dropped to about 22.5 per cent while Kasuku recorded 23.5 market share.

It now seems that both brands have had their market share seriously eroded as middle class Kenyans try to rein in their waistlines and keep the doctor at bay.

At the bottom of Consumer Insight ranking of the top 10 brands are cooking fats such as Chipsy, Ufuta, Frymate and Cow Boy.

“We are seeing a definite shift in the preference for fats versus oils. However, it is a gradual thing. Fat products still have higher penetration in the market and are cheaper. There will still be a place for them in the market for at least the next decade,” said Pwani Oil Group market researcher Benson Wariithi.

A November 2012 KNBS survey of leading economic indicators shows that the average price of a kilogramme of cooking fat fell by Sh12.12 in the year to November 2012 to stand at Sh229.03. On the other hand, the average price of one litre of cooking oil fell from Sh237.16 in November 2011 to Sh230.87 in November 2012.

Sub-Saharan Africa’s middle class has been growing exponentially over the last few decades on the back of rising Gross Domestic Product (GDP). According to the African Development Bank (AfDB), Africa’s middle class more than tripled in the years after 1980.

Poor Kenyans

Using the Living Standards Measure (LSM), the Kenya Advertising Research Foundation (Karf) in 2011 stated that the number of poor Kenyan households had dropped by 12 per cent since 2007.

Meanwhile, the middle class had grown to account for 24 per cent of the population in comparison to the 19 per cent reported in 2007.

The growth of the middle class has led to changing consumption and lifestyle patterns.

As Deloitte notes in its Consumer 2020 report, the middle class is more wont to adopt a varied diet and a more sedate lifestyle.

Although this has been associated with the rise of lifestyle diseases, growing affluence has led to increased consumer education that sometimes leads to a middle class that is willing to spent a little bit more money to purchase what it considers to be the healthier alternative.

“In the contemporary world the information needed to make healthy choices, especially in the urban context, is not always available. Also, the healthier alternative for most processed foods is usually more expensive.

That is why you might see a correlation between growing incomes and healthier choices,” noted Nairobi nutritionist Cynthia Wekesa.

The trend is not unique to the edible oils sector. In 2011, a survey carried out by the Bill and Melinda Gates Foundation projected that middle class demand would drive up consumption of fruits by the about five per cent.

Cholesterol levels

Although cooking oils have been often blanketed as more healthy, Mr Wariithi warns that this is not always the case. Cholesterol levels in cooking oils and fats can vary depending on the source of the product and the processor.

The Consumer Insight data reflects competition between cooking fats and cooking oils but a deeper analysis of figures reveals that the market is still dominated by three major firms.

Bidco Oil Refineries products – Golden Fry, Elianto and Kimbo – control about 40 per cent of the edible oils and fats markets.

Kapa Oil Refineries, which produces Rina and Kasuku, controls at least 26 per cent of the market.

Pwani Oil seems to be losing out in the battle with its flagship cooking product, Fresh Fri, controlling five per cent of the market. The company’s cooking fat, Fry Mate, registers 3 per cent market share.

cross 10 shelves, there are no more than five brands of edible fats and it is clear they are ceding ground.

The Sunday Nation’s observations are vindicated by a recent Consumer Insight report on consumption habits of Kenyans on cooking oils and fats.

In its findings, the research firm paints a picture of the demise of edible fats in the face of a more health conscious consumer.

According to Consumer Insight, the market is silently shifting towards cooking oils with five brands controlling about 46 per cent of the market.

Former market leaders Kimbo and Kasuku now jointly control 25 per cent of the market.

In 2005, Kimbo controlled 27.1 per cent of the cooking fats and oils market. Four years later in a similar survey, Consumer Insight reported Kimbo’s market share had dropped to about 22.5 per cent while Kasuku recorded 23.5 market share.

It now seems that both brands have had their market share seriously eroded as middle class Kenyans try to rein in their waistlines and keep the doctor at bay.

At the bottom of Consumer Insight ranking of the top 10 brands are cooking fats such as Chipsy, Ufuta, Frymate and Cow Boy.

“We are seeing a definite shift in the preference for fats versus oils. However, it is a gradual thing. Fat products still have higher penetration in the market and are cheaper. There will still be a place for them in the market for at least the next decade,” said Pwani Oil Group market researcher Benson Wariithi.

A November 2012 KNBS survey of leading economic indicators shows that the average price of a kilogramme of cooking fat fell by Sh12.12 in the year to November 2012 to stand at Sh229.03. On the other hand, the average price of one litre of cooking oil fell from Sh237.16 in November 2011 to Sh230.87 in November 2012.

Sub-Saharan Africa’s middle class has been growing exponentially over the last few decades on the back of rising Gross Domestic Product (GDP). According to the African Development Bank (AfDB), Africa’s middle class more than tripled in the years after 1980.

Poor Kenyans

Using the Living Standards Measure (LSM), the Kenya Advertising Research Foundation (Karf) in 2011 stated that the number of poor Kenyan households had dropped by 12 per cent since 2007.

Meanwhile, the middle class had grown to account for 24 per cent of the population in comparison to the 19 per cent reported in 2007.

The growth of the middle class has led to changing consumption and lifestyle patterns.

As Deloitte notes in its Consumer 2020 report, the middle class is more wont to adopt a varied diet and a more sedate lifestyle.

Although this has been associated with the rise of lifestyle diseases, growing affluence has led to increased consumer education that sometimes leads to a middle class that is willing to spent a little bit more money to purchase what it considers to be the healthier alternative.

“In the contemporary world the information needed to make healthy choices, especially in the urban context, is not always available. Also, the healthier alternative for most processed foods is usually more expensive.

That is why you might see a correlation between growing incomes and healthier choices,” noted Nairobi nutritionist Cynthia Wekesa.

The trend is not unique to the edible oils sector. In 2011, a survey carried out by the Bill and Melinda Gates Foundation projected that middle class demand would drive up consumption of fruits by the about five per cent.

Cholesterol levels

Although cooking oils have been often blanketed as more healthy, Mr Wariithi warns that this is not always the case. Cholesterol levels in cooking oils and fats can vary depending on the source of the product and the processor.

The Consumer Insight data reflects competition between cooking fats and cooking oils but a deeper analysis of figures reveals that the market is still dominated by three major firms.

Bidco Oil Refineries products – Golden Fry, Elianto and Kimbo – control about 40 per cent of the edible oils and fats markets.

Kapa Oil Refineries, which produces Rina and Kasuku, controls at least 26 per cent of the market.

Pwani Oil seems to be losing out in the battle with its flagship cooking product, Fresh Fri, controlling five per cent of the market. The company’s cooking fat, Fry Mate, registers 3 per cent market share.

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