COMPLAN MARKET ENTRY

STRATEGY FOR KENYA

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Applied Learning Project

on

COMPLAN MARKET ENTRY STRATEGY FOR KENYA

Submitted in partial fulfilment of the requirement of

Global M asters in Business Administration

Prepared for

S P Jain School of Global Management

Singapore/Dubai

Project Team

Dennis George Sumedha Sharma Varun Mahajan

(GAPR12CMM101) (GAPR12CMM1 30 ) (GAPR12CMM 131 )

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DECLARATION

We hereby declare that this report titled Complan market entry strategy for Kenya is the

result of study and interviews carried out by us. We further declare that this is our original

work and has not been published anywhere before. We have read and understood the IIP

Guidelines and we solemnly promise to abide by all regulations. Non -Compliance to the same shall result in disciplinary action.

This Project Work has been carried out for the sole purpose of submission towards partial

fulfilment of Global Masters in Business Administration (GMBA) program at SP Jain Sc hool

of Global Management, Dubai

The above is true to the best of our knowledge and understanding.

We have read, understood, signed and submitted the SP J ain Code of Ethics.

COPYRIGHT ASSIGNMENT

-

under copyright]

FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,

assigns, in perpetuity, all right (whether now known or hereinafter invented), title, and

interest , throughout the world, including any copyrights and renewals or extensions

thereto, in Complan market entry strategy for Kenya .

IN WITNESS THEREOF, Assignor has duly executed this Agreement.

Date:

Assignor: Project Team:

Dennis George Sumedha Sharma Varun Mahajan

(GAPR12CMM101 ) (GAPR12CMM1 30) (GAPR12CMM131 )

Project Mentor: Project Mentor:

Dr. Bal akrishna Grandhi Mr . Ashish Chakravarti

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ACKNOWLEDGEMENT The project Complan market entry strategy in Kenya gave the team a wonderful

opportunity to work with Heinz HJ, o ne of the most r eputed FMCG brands in the world.

The project proved to be a learning ground for gaining insight into the Africa market and

African consumer consumption patterns . The team also understoo d the various macro and

micro factors that impact the FMCG business. Th is project would not have been possible

without the help and guidance of few people. The team would like to express their heartfelt

thanks to them.

First and foremost , we wou ld like to express our gratitude to our corporate mentor Mr.

Ashish Chakravarti . H e ensured that the team was on right track and was always available

for feedback. In addition , his personal feedback to team members help ed them in improving

themselves.

Our s pecial thanks to Ms. Dorcas Halima, Heinz Africa team. She helped us execute the

survey in Kenya. In addition , she gave insight o n the Kenya market. We really appreciate

her quick response and readiness to help the team.

We would also like to thank Mr. Umesh Kothari and Mr . Nitin Patwa for their help and

feedback during questionnaire d esign stage.

Also, special thanks to Dr. Balakrishna Grandhi for his valuable insights which helped us

challenge our own assumptions and come out with better results.

Last but not the least we would like to thank all the respondents who took out time to f ill

our survey.

Sincerely:

Dennis George (GAPR12CMM 101 )

Sumedha Sharma (GAPR12CMM13 0)

Varun Mahajan ( GAPR12CMM13 1)

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TABLE OF CONTENTS

Executive Summary ................................ ................................ ................................ .... 6

1. Introduction ................................ ................................ ................................ ........... 7

1.1 Kenya -Country snapshot ................................ ................................ ......................... 8

1.2 In troduction to Nutritio nal drinks ................................ ................................ ......... 11

1.3 Kenya Hot Drinks Market ................................ ................................ ...................... 12

2. Research Methodology ................................ ................................ .......................... 14

2.1 Objective & Hypothesis ................................ ................................ .......................... 15

2.2 Importance of the Study ................................ ................................ ........................ 16

2.3 Research Design ................................ ................................ ................................ ... 16

2.4 Literature review ................................ ................................ ................................ ... 18

3. Analysis and Interpretation ................................ ................................ .................. 21

3.1 Market Sizing and potential ................................ ................................ ................... 22

3.2 Customer Behavior Analysis ................................ ................................ .................. 28

5. Marketing entry strategy for Complan in Kenya ................................ ................... 37

6. Future Scope ................................ ................................ ................................ ......... 44

References ................................ ................................ ................................ ................ 46

Appendix ................................ ................................ ................................ ................... 47

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EXECUTIVE SUMMARY

There have been tremendous change s in the eating habits of all age groups in the past few

years. More and more people , especially , children and teenagers are having erratic eating

habits and consuming fast food . Most of the urban families are becoming nuclear and

consuming ready to eat food. As a result parents are becom ing more focussed on their

children. Th ey want overall development of their children and are ensuring that their

children have balanced diet . One of the products which is gaining popularity in the

developing markets is nutritional or fortified drinks. N utritional drinks are adopting

different p ositioning strategies such as ability to help in height gain of children, increase

their immu nity levels or meet their daily nutritional requirement which helps them perform

better a nd become stronger. Apart from children, many youngsters s and s

and middle age d people are also consuming nutritional drink to make up fo r the missing

nutrients in the ir daily diet. Also , there are many specialised nutritional products for older

people aimed at fortifying their daily food and improv ing their immu nity.

The demand for FMCG products in mature economies such as USA and Europe is

stabilising and there is increased competition. M ost of the companies such as Nestle, Kraft,

Heinz ar e now focussing on increasing their sales in developing c ountries such as India ,

Africa and South east Asia .

The primary objective of the study is to estimate the market potential for nutritional drinks

in Kenya and develop a positioning strategy for Complan which is different from the current

competition. The final recommenda tion s of the project are aimed at design ing the Go to

The study is majorly focussed on SEC A and

SEC AB category as Complan is a premier pr oduct. The study was comprised of both

secondary and primary research. The prim ary research primarily consisted of face to face

survey interviews carried out in Nairobi in supermarkets and Malls. The survey carried out

on 130 respondents gave deep insight into consumer perception about various nutritional

and hot drinks which was used to design a positioning platform for Complan in the Kenya

market.

The study is aimed at understanding various m acro economic factors such as retail

landscape , political regime and social behaviour patterns , penetration of media which have

an imp act on business. In addition, the study i s also aimed at understand ing the

consumption and buying habits of consumers.

The project also mentions the future scope of the study which can be covered in future

researches.

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INTRODUCTION

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KENYA -Count ry Snapshot

Kenya is one of the fastest growing country in East of Africa and has the largest GDP in

East and West Africa. Nairobi is the

capital of Kenya which is also a very bi g

commercial hub .

the macroeconomi c factor which can

have an impact on the business. Given

below are certain factors that were

studied to understand the Kenya

market better.

Political :

Although Kenya faced communal riots

post its 2007 election but the economy

has fully recovered now and currently

has the highest GDP and per capita income.

Kenya had it s general election in 2013 and Uhuru Kenyatta won the majority. Although , he

is currently facing an intern ational trial in United Nations but its outcome is not expected

to have a great impa ct on the business conditions of the country. In addition , the country

faces terrorism threat from Sudan and other neighbouring countries which are very

unstable. According to Vision Humanity website , the country ranks 18 th in world ter ror ism.

Moreover, th e country faces rampant corruption and ranks 139 according to

transparency.org. The country also faces high energy cost and poor logistic and transport

system .

Economic:

Kenya has a liberalized economy and is considered as Central and Eastern African

comm ercial hub. The country has positive economic prospect as GDP is growing at 5 -6%.

In addition , many international companies are looking at investing in the country. The

country has large pool of English speaking computer literate professional who can prov ide

the base for growing economy. The country is looking at incorporating reforms to simpl ify

its local and foreign investment. But there are certain downside s to the economy as well .

The country is r anked 121st out of 185 economies in the s Ease of Doing

Business Index , down from 117th (out of 183 economies) in 2012. It is also 8 th highest in

Gini index on income inequality .

Social:

Kenya has one of the youngest population in the world where almost 43% of population is

below 14 years of a ge. This is a great opportunity for brands that are facing tough

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competition and low consumer spend ing in home countries and mature economies. The

country also has young working population which have high spending powers. In addition,

the new age families have high disposable income and spending large amount of money on

their children.

Retail landscape:

It is very important for any company to understand the distribution and retail structure of a

country befor e a product launch. As per AC Nielsen report , Kenya has the highest

penetration of modern retail channels like malls and supermarkets in Africa and has one of

the most developed retail landscape in Sub Saharan Africa . The country has both

traditional and modern channels of trade. Although , modern trade channels make just 10%

of the retail channel volume, they cater to the biggest consumer spending (Kenya retail

landscape, Deloitte 2011 ) .Kenya has many retail cha ins such as Nakumatt, Uchumi,

Tuskys . Nakumatt is the lea ding chain in Kenya and is r anked 29 th in Campden FB Top 50

Global Challengers List.

Media Penetration:

Kenya has very high media penetration and has all medium of mass communication . As per

Vernacular radio report 20 11, r adio has the highest media penetration of 95%.There are

almost 100 ch annels available in Kenya. Some of the popular ones are Homeboyz Radio,

Hope FM, Capital FM, kass FM etc. These channels play both English and Swahili music.

Each city has its own channels as well. Mobile penetration is 71% which is one of th e

highest in t he world. Internet penetration is 28% and Africa has the 2nd h ighest internet

speed in Africa (freedomhouse.org ).Apart from that TV has 71% media penetration and print

media has p enetration of 48% .

Nutritional trends :

Due to high income inequality, the st andard of food intake varies among Kenyan

population. Complan targets high net worth people who can afford balanced diet , therefore ,

i . Ho wever, as per a report from FAO

UN the most common deficiencies found in Kenya are Zinc, Vitamin A, Iron, Folic acid.

Shift to Urban Cities:

More and more people are shifting to cities with Nairobi the capital cit y seeing an increase

of 17.6 % in population with total inhabitants in excess of 3 million. All major cit ies are

seeing rise in population with people migrating from rural to urban areas. The rate of

urbanization is set to grow in coming years with estimation that by 2020 around 26% (13.

Million) Kenyans will be living in cities as compared to present when ar ound 22%

population live in the city.

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This will lead to higher socializing by people and increased disposable income and so the

consumption of branded goods is set to increase in the future.

In troduction to Nutritional drinks

"Nutritional drink" refers t o any drink or additive which contains nutritional ingredients,

such as vitamins , minerals and proteins. Some brands position nutritional drink as a drink

for sportsperson or people focussing on fitness while other brands promise overall

development and serve as a supplementary source of vitamins and mineral s. For example,

vitamin C control s infection, vitamin A helps with cell growth and the production of white

blood cells. Some drinks contain iron, calcium and other minerals important for healthy

circulat ion and bones. Few of the drinks have reliable scientific evidence to support claims

such as improved mental performance.

Given below is general classification of hot beverages. It is divided into Tea and coffee which

are the most popular hot beverages. Apart from that there are other hot drinks in the

market which can be further subdivided into nutritional a nd fortified drinks and other

drinks like cocoa and drinking chocolate.

Complan is a nutritional drink from Heinz which focuses o n providing planned and

balanced nutrition for gro wing children. According to Heinz, Complan stands for complete

planned food & is milk based nutritional health beverage fortified with 23 vital nutrients

in balanced proportion including 100% milk protein to help in better c hild growth. It is a

nutrition expert and its formulation is specially designed to meet the requirements of

growing children.

Nutritional drinks are also know n as fortified drinks in some markets like India. As per the

research ers understanding drinks l ike Milo, Bournvita , Horlicks and Complan fall under

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nutritional/fortified drinks whereas drinks like Cadburys c ocoa, Cadburys drinking

chocolate do not have any nutritional value.

Kenya Hot Drinks Market

Hot drinks in Kenya had CAGR volume growth of 5.6% for the period 2006 -2011 and value

growth of 9.1 %. The major brands being sold are chocolate based drinks with the highest

brand share by Cadbury drinking chocolate followed by Cadbury cocoa, Milo and Raha. The

table below sho ws the v alue wise share of d ifferent drinks. As can be seen, the share of

Chocolate based drinks is exceptionally high as compared to non chocolate based drinks.

Chocolate is the most popular and the primary flavor in a drink for Kenyans. 99.8% of the

total sales of other hot drinks are chocolate based drinks. In 2011 the historical data shows

that 11237 tonnes of chocolate based drinks were sold in comparison to only 15.5 tonnes of

non chocolate based drinks. There has been a compounded annual growth rate of 5.56%

from 2006 to 2011.

Fig : Volume of chocolate and non chocolate based drinks sold in Kenya between 2006 and 2011

Considering the current and future trends and the macroeconomic factors, Euromonitor

has forecasted the CAGR at 6.86% from 2011 to 2016. Euromonitor expects th e growth rate

and the popularity of chocolate based drinks to be maintained even though there are

threats of rising costs of cocoa due to escalation of violence in the cocoa producing regions

To

nn

es

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Fig : Forecast volume of chocolate and non chocolate based drinks to be sold in Kenya between

2011 and 2016

Fig : Value of chocolate and non chocolate based drinks to be sold in US dollars in Kenya between

2006 and 2011

Fig : Forecast Value of chocolate and non chocolate based drinks to be sold in US dollars in Kenya

between 2011 and 201

To

nn

es

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There are three major players in the industry Cadbury, Nestle and Excel. Cadbury is the

market leader with more than 45%

market share and has maintained that

share for over 5 years. The m ajor factor

of its success can be attributed to the

small 15gm packs of drinking chocolate

and high spent on advertisements. Nestle

is a distant second with 22% market

share followed by Excel chemicals with

15% market share. These 3 companies

have more or less maintained their

dominance over the years with static growth and each protecting its market share. Major

factor is a loyal customer base and innovative marketing campaigns which these 3

companies focus on.

Distribution channels:

The primary channel of distribution for Hot drinks is through independent retailers and

supermarkets.

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RESEARCH METHODOLOGY

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2.1 OBJECTIVE OF THE STUDY

Heinz is one of the most well known brands across the world. As the matured economies of

USA and Europe stagn ate, the co mpany is looking at expanding i n developing economies

such as India and Africa. The primary objective of th is study is to make a go to market

in Kenya. The first phase will be targeted at three cities

(Nairobi, Kisum u, Mombasa) followed by additional three cities (Eldoret, Garissa, Nakuru )

by 2015 .

OBJECTIVE :

The three primary objectives of the

project are as follows :

To u nderstand the market size and

opportunity sizing for nutrition

drinks in Kenya.

To u nderstand and evaluate

consumer behavior and

competitors to decide which

s Complan take

in Kenya market

Develop a Go to market strategy for Complan in Kenya.

RESEARCH GAP:

The research aim s to fulfi l the following need gaps in study of hot drinks market in Kenya :

Consumer demographic

Brand awareness and top of mind brand recall for hot drinks.

Consumer purchase behavior : Location /packaging preference/ Frequency

Major motivators to purchase

Behavioral pattern of milk consumption by children

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2. 2 IMPORTANCE OF THE STUDY

It is imperative for Heinz to do market research before launching a product in a new market

as it has to invest a lot of money in market communication and setting up of distribution

channels for Complan. The study is aimed at prov iding market insight to Heinz regarding

the market potential f or nutritional drinks in Kenya which can help company take a

calculated decision. The study will also form a base for further research to be done by AC

Nielsen . Also the African market is unlike any other developing market as its diverse and

culturally different. The project aims at understanding the various consumer segments &

behaviours and developing a launch plan for Complan in Kenya.

2.3 RESEARCH DESIGN

The research design is a

method adop ted in the

research process . The flow of

the research has been given

in exhibit on the side . Out of

the four basic research

methods - surveys,

experiments, secondary data

studies and observation

(Zikmund, 2003), we have

selected surveys, secondary

data stu dies .

Secondary Research

The secondary research was targeted towards getting indepth knowledge of the nutritional

drink market worldwide and specifically in emerging markets. It also include d studying the

current ind ustry scenario and performing competit or analysis. The research aims to find

the market potential and opportunity size for nutritional drink specifically in Kenya. The

secondary research majorly included study of industry report and academic j ournals.

Primary Research

The primary research cons isted of quantitative r esearch.

Research Methodology

Secondary

Industry report

Academic Journals

Primary

Quantitative survey

Consumer analysis

Demand forecasting & market sizing

Go to market strategy

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Quantitative Research :

The quantitative research consisted of face to face survey which was carried out in Nairobi.

The major aim of the quantitative research was:

Quantifying and validating the findings of our qualitati ve research

Understanding consumption nd purchasing patterns.

Making recommendations in terms of brand positioning and advertising of

Complan in Kenya.

SAMPLING

the sa

The questionnaire was administered in supermarkets and mall. The sampling was done

SEC A and AB based on monthly household income

Mothers of children betwee n 4 -18 years.

The kids should have milk and mix additive in their drinks.

Questionnaire Design

The questionnaire was designed for face to face interview. Since the survey was being done

by another team in a Kenya. The questionnaire was limited to a 20 min utes interaction with

the respondent. The questionnaire was primarily focussed on getting information on the

consumption habits of milk by children in the SEC A category and understanding the

purchase behaviour of mothers for nutritional drinks.

Data Ana lysis

The analysis stage involve d the application of relevant statistical tools to find and validate

the desired outcomes. It help ed us segment different buyers on relevant factors according to

their needs and wants in terms of products being used. The ana lysis help ed us find feasible

solutions to cater to the different segments and help decide marketing strategies to launch

Complan in Kenya.

The following tests were used in data analysis.

Factor Analysis

Cluster Analysis

Cross tabs

Perceptual mapping

Micro soft excel and SPSS software for windows was used for data analysis. B

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2.4 LITERATURE REVIEW

Food and Agricultural Organization of the United Nations (FAO) and World Health

Organization (WHO) define fortification as "the practice of deliberately increasin g the

content of an essential micronutr ient, i.e. vitamins and minerals in a food irrespective of

whether the nutrients were originally in the food before processing or not to improve the

nutritional quality of the food supply and to provide a public healt h bene fit with minimal

risk to health. " Milk and milk based products are one of the most common fortified foods.

As per Fortified/functional Beverages in I ndia , Euro monitor International , 2011 , most

people feel the need for nutritional drinks to make up f or the missing nutrients in their diet.

Most of the people have erra tic work schedules so they look for easy to consume fortified

drinks .In addition ; children also consume nutritional drinks for extra nutrition and also

the fact that it makes milk tastier . As growing children have extra need for nutr ition,

Fortified drinks are made part of their daily diet.

As far as brand positioning is concerned, most of the brands have an overall wellness

positioning. However, brands are now focussing on ingredient b randing. The leading

functional ingredients are protein, vitamin, iron, calcium, iron, and omega -3. Most brands

such as B ournvita, Horlicks, Complan are focused on boosting overall growth and health,

improving br ain health, memory, bone health. In addition , most nutritional drinks focus on

boosting strength, stamina or heigh t. Many drinks are now focusing on com plete mental

and physical health encompassing sharpness, alertness, stamina, physical and mental

growth, memory as well as immunity. However, many n utritional drinks are being marketed

only on basis of improving the taste of milk.

As per Euromonitor Other Hot drinks -Kenya the other hot drinks market in

Kenya is increasing YOY as a result of increased consumer awareness, strong marketing

and new brands in the market. Chocolate based flavoured powders such as Cadbury coc oa

and drinking Chocolate recorded the maximum growth in 2011.The category is expected to

grow at a CAGR of 7% over the forecasted period till 2015.

Some of the new trends in the nutritional drink market are introduction of small packages,

increase in prices because of rise in raw material prices. In addition , many companies are

investing in advertising campaigns to build awareness about the category and also their

brand rec all.

As per Food and Agriculture Organization of United nations report Nutrition Snapshot

Kenya , Almost a third of Kenya population is undernourished as the dietary energy supply

is not met. The undernourishment is associated with deficiency of micronutrie nt such as

Zinc, Iodine, Folic Acid, Vitamin A. Other important health indicators like Infant and under

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five mortality rates are stagnating and increasing respectively. Also HIV has compounded

the deteriorating health standards particularly in urban area .As per three national survey

carried out in 1998, 2000 and 2003 which document the nutritional status of preschool

children, almost 20% of children under 5 were underweight. However, this trend was more

prevalent in rural areas as compared to urban area.

As per Euro monitor report on Trends in Hot drinks market, the most preferred channel for

hot drinks distribution is supermarkets/hypermarkets . Consumers like shopping at these

outlets since they offer wide product range and also offer price promotions. Most of the

buyers purchase hot drinks along with their weekly purchase rather than impulse

shopping. In addition, although consumers will keep on seeking out cheaper channels but

they are not ready to compromise on quality in hot drinks. As per Deloitte repo rt The

hidden heroes -the next generation of retail markets the consumer spending has increased

in Kenya due to growing middle class, combined with demand from affluent expatriate

community. 90% of national grocery sal es are generated in traditional and informal sector.

The biggest part of consumer spending is done in big cities like Nairobi and Mombasa which

have supermarkets . imports. Also the

integration of East African community will create new opportunitie s for foreign investors in

Kenya

In a research paper by Dharmesh Motwani and Khushbu Agarwal Customers' Behaviour in

Health Food Drink Product Category that over the last few consumers have become

more health conscious. The paper discusses that bet ter understanding of consumer

perception of healthy foods and its determinants is one of the key factors for harnessing

market opportunities .

As per research paper by titled Consumption of nutritional supplements

among adolescents: usag e and perceived benefits , that many adolescents agreed that they

obtained supplements such as vitamins and minerals from their mother. In addition many

adolescents were actually unaware of the benefits of the supplements supplied by their

mother; They jus t had a vague idea that nutrit ion drinks make them healthier. Most

nutritional drinks are perceived to be beneficial and useful in prevention of illness. Most of

the people associate nutritional drinks with short term benefits like prevention of cold, flu

and cold sores. Similarly, Nowak and Crawford (Nowak and Crawford, 1998) found that

adolescents recognize the importance of food in the long -term prevention of future illness,

but attach more importance on short term issues such as their current looks, en ergy and

fitness.

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TARGET CITIES

Nairobi

With a population of 3.48 million as of 2013, Nairobi is the most populous in East Africa. It

has the 4 th largest population in Africa. It is considered the most urban and modern city in

Kenya. Nairobi is conside red as the political and financial center of Kenya. It has the

highest literacy rate in Kenya. Male and female have a literacy rate of 90.6% and 79.7%

respectively. Nairobi has the largest industrial base. There is an influx of foreign exchange

due to a l arge community of expatriates. Standard of living is the highest in Kenya.

Nairobi constitutes of 8 constituencies

Westlands, Kasarani and Embakasi .

Mombasa

Mombasa has a population of 1.04 million as of 2013 and is the second largest City in

Kenya. This city lies next to the Indian Ocean . It boasts of a major Seaport , Kilindini

Harbour and an International A irport. The City is also the center of the coastal tourism . The

local industries include an oil refinery. Mombasa boasts of a literacy rate of 86.1% as of

2012. The major languages spoken are Swahili and English.

Kisumu

growing cities in Kenya. It is a p opular tourist destination and known for its strategic trade

harbour. Kisumu has a literacy rate of 48%. Kisumu serves as a communication and

trading confluence for the great lakes regions for Uganda, Tanzania, Rwanda and Burundi .

Eldoret

Eldoret is an in dustrial city with a population of 0.70 million. It is the fifth largest city in

Kenya.

Garissa

This is a market center and commercial hub with a population of 0.69million. This is a

market hub and commercial hub of the region.

Nakuru

With a population of 1.78 miliion, Nakuru is the fastest growing city in Africa and the 4th

fastest growing city in the world. Known for agriculture, manufacturing and tourism . The

population growth rate was 13% in 2011.

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ANALYSIS AND

INTERPRETATION

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MARKET SIZING & OPP ORTUNTY SIZING

Target Demographics

According to Euromonitor ,

population is relatively one of the youngest

in the world. This is at the time when the

many nations across the world have started

gaining signs of an aging population. This is

an encou raging sign for a company that is

foraying into a country with a product

targeted specifically at children between the

age of 4 to 14 years. From 2009 to 2015 , the

percentage of children between the age of 4

to 14 years represent 43% of the population.

Period

The period at which the market sizing and

demand forecasting will be calculated will be

for three years from 2013 to 2015. This is a

good enough period to estimate the market.

The addition of cities and the impact on the

overall volume and value sales can be

estimated.

Methods available to calculate demand forecasting and market sizing

According to the book, Case in point by Marc P. Cosentino, there are three ways to segment.

They are

1. Individual segmentation

2. Household segmentation

3. Population segmenta tion

The method considered most suitable for segmentation in this scenario is Household Segmentation.

Facts and considerations taken when the demand forecasting is calculated

1. According to a study of AC Nielsen of

Kenya in 2011, the ta rget income group i s

SEC A and SEC AB. They comprise of 11%

and 9% of the total Kenyan population

respectively. Together with SEC B which

then comprises a total of 33% of the entire

population of Kenya, these respondents

together contributed 77% of the income .

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Eligible population criteria

Children between the age of 4 to 14

years

Belong to the SEC A and SECAB

category

Belong to the six target cities

ELIGIBLE POPULATION ESTIMATE - 2014

CITYTOTAL

POPULATION (million)

ELIGIBLE POPULATION

(million)

% OF TOTAL POPULATION

NAIROBI 3.58 0.16 4.46%MOMBASA 1.07 0.05 4.84%

KISUMU 1.10 0.07 6.24%NAKURU 1.83 0.11 5.92%ELDORET 0.72 0.04 5.98%GARISSA 0.71 0.05 6.78%TOTAL 9.01 0.48 5.32%

ELIGIBLE POPULATION ESTIMATE - 2015

CITYTOTAL

POPULATION (million)

ELIGIBLE POPULATION

(million)

% OF TOTAL POPULATION

NAIROBI 3.67 0.16 4.46%MOMBASA 1.10 0.05 4.84%

KISUMU 1.13 0.07 6.24%NAKURU 1.88 0.11 5.92%ELDORET 0.74 0.04 5.98%GARISSA 0.73 0.05 6.78%TOTAL 9.25 0.49 5.32%

2.

population is 2.67% according to World Bank .

3. Average size of a Kenyan household and population of cities

received from Kenya Open data source. This is a online

government of Kenya initiative wherein the city wise

population estimates are maintained and updated.

4. Complan pack size 400gms

5. Annual consumption of 400gm b ottles is taken in three scenarios. 12 bottles per year, 18

bottles per year and 24 bottles per year.

6. Price of a pack of 400gms Complan 650 Kenyan Shillings

7. Complan market share estimate

2013 5%, 2014 7.5%, 2015 9%

The process of calculating the en tire demand forecasting is as follows :-

1. The average household size of Kenya is taken from Kenya Open Data source.

2. Total households in Kenya are calculated from the total population received from Kenya

Open Data source.

ELIGIBLE POPULATION ESTIMATE - 2013

CITYTOTAL

POPULATION (million)

ELIGIBLE POPULATION

(million)

% OF TOTAL POPULATION

NAIROBI 3.48 0.16 4.46%MOMBASA 1.04 0.05 4.84%

KISUMU 1.08 0.07 6.24%TOTAL 5.60 0.27 4.87%

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3. The no. of households available in the segments that are our target segments i.e. SEC A

and SEC AB will be calculated.

4. Estimated 50% of the target segment consumes other hot drinks.

5. Total volume consumption and value of sales from the consumption of other hot drinks

6. Estimated market s hare of Complan is calculated from the total sale and consumption of

other hot drinks in the marke t.

ANNUAL HOUSEHOLD CONSUMPTION 12

YEAR ANNUAL MONTHLY

SALES BOTTLES

2013 $ 636,980.18 7003

2014 $ 1,351,707.70 14860

2015 $ 1,779,545.39 19564

ANNUAL HOUSEHOLD CONSUMPTION 18

YEAR ANNUAL MONTHLY

SALES BOTTLES

2013 $ 955,470.27 10504

2014 $ 2,027,561.56 22290

2015 $ 2,669,318.09 29345

ANNUAL HOUSEHOLD CONSUMPTION 24

YEAR ANNUAL MONTHLY

SALES BOTTLES

2013 $ 1,273,960.36 14005

2014 $ 2,703,415.41 29720

2015 $ 3,559,090.79 39127

P a g e | 25

COMPETITION ANALYSIS

The major players in h ot drinks market in Kenya are as follows:

Cadbury

Nestle foods

Excel chemicals

Glaxo Smithkline

Figure shows the various company

shares as pe r retail value in 2011.

Source: Euromonitor International

chocolate a nd Milo are the same. Therefore, while studying competition it is important to

study both direct and

indirect competition as

consumers buy both

interchangeably.

As Shown in Exhibit , the

direct competition to

Complan in Kenyan

landscape is Bournvita

and M ilo which are

nutritional drinks. The

rest being the indirect

As mentioned earlier, the indirect

competition cannot be ignored because the differentiation between a hot drink and

nutr itional drink is not very clear. In the initial phase the company can target fighting

against Bournvita and Milo but in the long term the company has to also keep in mind the

activities being done by indirect competition such as Raha and Cadburys drin king

chocolate .

P a g e | 26

The market share of the different brands in the Kenya market for the period of 2008 till

2011 is given in the exhibit on the side. . Cadbury drinking chocolate has been the market

leader since 2008 and the liking of chocolate flavour by t he Kenyan masses helps

2008 till 2011. Every player has been able to hold on to its market share over a 4 year

period.

A closer look at the competition shows us the following picture: