In the recent past, there have been some highlights on Kenya’s trade with the Middle East market. Let’s take two instances; the ministry of trade cited need to expand the reach in trade, and the Kenya Meat Commission (KMC) with the ‘meaty’ issue of developing the market offering. Like any other market, there are numerous issues that any Kenyan company (or any other) faces while trying to enter the market.
Let us take the first issue on overall need to expand the reach in trade within in the region as cited by the Ministry of trade. The Middle East is relatively vast and we can further sub-divide the region into two areas:
- The Gulf Cooperation Council, GCC, made up of six states (UAE, Qatar, Bahrain Saudi Arabia, Kuwait and Oman)
- The Levant (Lebanon, Syria, Jordan, Palestine states).
While the geographical issues are relatively easier to handle, it is the demographic and market composition that is a challenge. Taking the UAE and Qatar together, these are nations with relatively higher disposable incomes in the world but with a different market composition from the rest. The citizens (local nationals) comprise less than 15% of the total population. This also reflects in a number of indicators. For instance, according to the 2010 census in Qatar, there were 2,077 local nationals with masters or PhDs compared to 16,069 expats, from a combined population of 1.7million.
In Bahrain, Saudi Arabia and Kuwait, there are varied proportions of expats and citizens. Oman mostly comprises of local nationals, but has strong historical ties with the east Africa coast (so Swahili is not uncommon). The Levant region is made up almost entirely of local nationals from the respective countries.
Hence, for the GCC, expats form bulk of the market, mostly from the sub-continent. For instance, Indians form about 35% of the population in the UAE, followed by expats from Pakistan. There are expats from over 100 countries in the UAE, all who have different tastes and cultural orientations. This has a number of implications:
- Given the nationals form less than 15% of the populations, then the mindset of having a market made up of many local Arab dwindles. This segment, with relatively higher disposable income, is mostly one for value propositions.
- The balance 85% is made up of expats. Hence, competition is mainly from products and services from their respective countries. For instance, if it is tea, a resident from Pakistan may take more tea imported from his home country. There is a chance that’s a blend of Kenyan tea in it! You will find the Kenyan coffee beans at Star Bucks, but in the neighbourhoods, local roasters will be preparing coffee based on various backgrounds – Arabic, Turkish, Ethiopian, Lebanese …etc.
However, in terms of income, the expats segment comprises of diverse groups with significant differences in purchasing power.
The above illustrates that entry to the market is by either having a relatively premium product or customising it to have a cultural theme. This applies also to other areas like restaurants. Apart from the international franchises, most residents also identify with restaurants from their respective ‘cultural’ cuisines.
The case of meat brings to light a lot of interest as the meat market, especially in the UAE, which is developed in depth and breadth. Meat from the local market, cuts from Australia and Brazil, animals from Pakistan, India to Sudan, Ethiopia among others (sometimes Somalia), and all seeking shelf space as from Kenya. If you include the processed category, then throw in countries like Netherlands, Germany, and Belgium …etc. Farmers Choice gets in here and plays in this category. In my opinion, the latter has done well, even in the light of limited access due to predominantly Muslim market that restricts sale pork.
However, it is the first category of the unprocessed meat that is of my interest. This includes beef, mutton / lamb and to some extent camel meat. It is the products that you will find in the supermarkets and local meat market (or Butchery – as we popularly call it). Once again, the demographic factor plays a role in the consumption. Meat is a historical part of the diet within the region, and among relatively large families, buying at least five kilos is not uncommon. During the festivities like Eid Al Adha, the numbers always go up, mostly need for whole animals. Hence, this presents a market for the bulk purchases. This is where the challenge arises for KMC to ensure such bulk deliveries are validated from the source.
On the other hand are small families or single member households who go for specific cuts. Hence, it is in both areas of bulk and fine cuts that KMC can come in and play a significant role in developing the market share. But as highlighted, competition is stiff.
And talking of a cultural view, there is a buzz on the social media of packets of Ugali now readily available in outlet. Kenyans in the UAE can now get the taste of our favourite dish locally. The bottom line confirms the point above of the cultural influence for local brands to enter such a market
For details, contact:
pauline@episodesresearch.com
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