Business Daily (Nairobi)
Wanjiru Waithaka
11 September 2007
Low domestic consumption of tea is one of the key obstacles to better earnings, a new report presented to the Minister of Agriculture says.
The report by a taskforce appointed by the minister says the industry could significantly improve its earnings if local consumption doubled to 10 per cent of the entire output from the current level of five per cent.
To boost consumption in the domestic market, the taskforce proposes that tea be classified as food and zero-rated for VAT to stimulate demand by making it more affordable to consumers.
This recommendation is in tandem with a recent move by Tanzania to remove VAT on locally produced tea boosting local consumption by 20 per cent.
Ms Sicily Kariuki, the managing director of Tea Board of Kenya, reckons that while zero-rating tea for VAT is a long-term initiative, consumer campaigns could help the industry boost its earnings in the short-term.
"Our campaigns between the months of May and July produced exciting results," she said. Statistics show that local tea consumption rose by 30 per cent to 10 million kilogrammes in the first half of this year compared to 7.5 million kilogrammes realised for the same period last year.
The campaign, which cost Sh15 million involved road shows, in-store promotions in 30 key supermarkets, wet and dry sampling, and door to door sales in 5,000 homes in Nairobi and 3,000 in Mombasa.
"We have taken a break to plan a more optical campaign that will bring in more brand pushers, target more towns and also institutions like schools and colleges," she says.
The taskforce also identified access to tea from the Mombasa tea auction by small packers as another major tea industry problem that is limiting the consumption of tea in the country.
Although tea packers can get tea from some factories, there is a steep premium. The challenge lies in the fact that buyers can only bid in packages of 20-40Kgs -- an amount that starters say is too high.
"When we were starting 10 years ago this was a big problem but now we buy in big lots," says Flora Mutahi, managing director of Melvin Marsh International which produces flavoured and herbal teas under the Melvins brand.
Ms. Mutahi says that compared to the current auction price of $1.60 per Kg (Sh107) buying from a factory would cost upwards of Sh200 per Kg.
To grow domestic consumption, the industry has also to contend with the perception among young Kenyans that tea is an old people's drink.
Kenya Tea Packers (Ketepa), the market leader, attributes low local consumption to low consumption by the youth. Managing Director Timothy Chege said the country risks a further drop in local tea consumption if the youth do not increase their consumption.
Mrs. Kariuki concurs and says that the Board will use the October ASK Agricultural show to engage children on the health benefits of drinking tea.
"The message about the health benefits of tea has to be sustained long term. We want to encourage people to drink black tea and if they have to use milk or sugar it has to be negligible," she says.
Black tea is said to contain no artificial colourings, flavouring or preservatives and almost no calories before milk is added. Research has also found that tea is an antioxidant and may help to prevent heart disease and cancer.
But Ms. Mutahi says the problem is the way tea is marketed.
"Tea has been marketed as a family drink and has no appeal to hippy youth who want to be different. This is why Melvins goes for fun and for choice. We're about making tea a fun drink and giving flavoured and herbal alternatives to people who do not like the plain taste of tea," she says.
Melvins has four flavours and one herbal variety including ginger, masala, cinnamon and vanilla as well as a regular blend - Safari.
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