A case of multinational investments in East Africa: the soft drinks industry in Kenya

Abstract

There is very little information available on the soft drinks industry in Kenya and this study is an attempt to rectify the situation. It provides some information on the soft drinks available on the Kenyan market. From an economist point of view, the study shows the oligopolistic nature of the industry and discusses some of the problems which face small local manufacturers of soft drinks in the country. In this paper, the relationship between the manufacturers of carbonated soft drinks is discussed. ~his is done by grouping the manufacturers into multinationals and small local firms. One of the main aspects considered is the differences existing in the operation of these two groups of firms. The operation of the ['irms is looked at from different sides covering production, marketability and distribution of their products. The marketing tactics of the manufacturers of internationally branded products have concentrated on advertising. Thus in absence of price competition in the soft drinks industry, this has become an important means of acquiring market shares. In this respect, the s~a:l lo-c.a..•l firms have been handicapped. Apart from advertising, the study considered other aspects of oligopoly such as collusion, existence of cartels and price leadership in the industry. (iii) In addition, this paper _ discusses some of the problems which face small scale industrialists in developing countries in general and the soft drinks industry in particular. These firms face problems such as lack of capital, markets, managerial resources and technological know-how. Carbonated soft drinks are then compared with non-carbonated ones to reveal the existence of any competition between them. From this study, the conclusion is that producers of internationally branded prodllcts have an influence on the performance of small-local firms.