Competitive strategies adopted by coffee roasters and packers in Kenya

Abstract

Roasting and packing of coffee in Kenya has recently witnessed dramatic changes that have affected the state of competition. This study sought to determine the competitive strategies adopted by coffee roasters and packers in Kenya, and to establish the challenges faced by them in initiating competitive advantages and applying strategies so formulated. The study targeted the registered coffee roasters and packers in Kenya. Response was received from 14 out of the targeted 23 companies thus constituting a response rate of 61%. The data was collected with the help of a semi-structured questionnaire. The data was then analyzed by use of statistical spreadsheets and presented in the form of percentages, frequencies, mean and standard deviation tables. The local roasters and packers for coffee have adopted in general the five generic strategies, namely, cost leadership, differentiation, best-cost provider, cost focus and differentiation focus. However, it is notable that 50% of the firms have been inclined to use best-cost provider strategies. These work best where the customer makes product differentiation the norm and is sensitive to price and value. There is however, deliberate attempt to segment the market into specific offering, and thus focus strategy is apparent with the players who have curved a niche for themselves. Overall, most coffee roasters and packers in Kenya have performed well. The success in sale of roasted coffee has been achieved due to development of strategies that meet the market requirements. Key challenges faced by the firms were identified as financial requirements, keeping abreast of changing consumer tastes and preferences, barriers to enter and exit the industry, ability and skills of shareholders, ability and skills of staff, marketing of the product, and competition from non-branded firms. Government intervention and erratic provision of utilities were also mentioned as key challenge areas. These challenges have been resolved in differing extents in attempts to stay abreast in the competitive market.