Tea trade in Kenyan markets: Effects of marketing strategies on sustainable domestic market and return to the smallholder tea enterprise

Abstract

Kenya is the third largest tea producer and the leading producer of black tea in the world. It exports over 99% of her tea as black CTC of which 88% is exported in bulk form while the rest as value added tea. Kenyan tea is acclaimed globally as a high quality product, available all year round. It is primarily used for blending tea from other origins hence lacks visibility in the world market. Kenya's domestic market is limited and accounts for about 5% of her total production. A drop in demand in any of her exporting market can lead to a major impact on her revenues from tea as well as the return to the smallholder enterprises. The processed tea is traded through three marketing channels namely; direct sales, factory door sales, and the tea auction in Mombasa. The Mombasa Tea Auction serves as a regional auction centre for the tea producing countries namely; Uganda, Tanzania, Rwanda, Burundi, Congo and Malawi thereby positioning Kenya as a major tea trade centre. However, the Mombasa Auction faces competition from the Dubai Tea Trading Centre (DTTC) posing a challenge for the Kenyan tea industry. It is because of this glaring competition that the Tea Industry needs to have plan B. This paper explores the effect of the marketing strategies on creating sustainable domestic markets and on the return to the smallholder tea enterprise in Kenya. The paper is guided by secondary tea sector data, field data obtained from smallholder tea farmers sampled from KTDA managed factories in the Nyeri and Kirinyaga counties. Interview reports from key tea sector stakeholders in Kenya were used as well. The paper indicates that the domestic market of the Kenyan tea is shrinking due to unfavourable marketing strategies. Brand awareness locally is ignored and all the efforts are geared towards foreign markets which are not sustainable. Promotion of the domestic markets would increase the brand ownership creating a competitive platform for tea and other beverages in the shop floors. This in turn would increase the smallholder earnings through increased sales volumes and improved prices. The paper recommends strategies that would increase awareness of tea locally to the advantage and benefit of the smallholder tea enterprise and ensure sustainability of domestic Kenyan market.