An Exploratory study of the coffee industry in Kenya

Partial fulfillment for award of the degree of Master of Business AdministrationOver the years, Kenya has gained recognition in the global market on account of the very fine quality of coffee produced and exported. The resulting high revenues led to the coffee sector becoming the leading foreign exchange earner from independence until the late 1980’s. Further, the sector was credited for its central role in the alleviation of poverty in rural Kenya. The coffee sector has since been overtaken and today ranks 4th after tourism, tea, and horticulture. The dismal industry performance has caused great concern and has led to loss of jobs and incomes to families. Recognizing the significance of the coffee sector in Kenya, this study explored the various issues impacting on the coffee industry and, in the process, aimed to identify issues that could boost the sector. Information was gathered from knowledgeable individuals in the coffee industry through the use of semi structured questionnaires. Data was compiled and processed using descriptive and explanatory statistics. The study affirmed that the growing challenges facing the sector had impeded its growth and were responsible for declining national output. The study further established that there was a need for concerted effort and collaboration by stakeholders to come up with solutions and coordinated actions that would address the challenges identified and in the process enhance the sectors contribution to the national economy. Specifically, the findings of the study showed that the attractive export market has had a negative impact on coffee consumed locally. The findings also indicated that an increase in branded coffee shop chains in the urban capital Nairobi in the last five years has had powerful impacts with an appreciation of coffee drinking setting in and a willingness on the part of consumers to pay above average local retail prices in these branded coffee shops. Further, the study established that local consumption is driven by various factors such as the need to socialize in an attractive venue and a desire by individuals to be seen in smart coffee shops with modern decor. With the rising urban population, these shops are growing in popularity and considered trendy and fashionable. These are all manifestations of the fast changing COnsumer dynamics in Kenya, traditionally a tea-drinking nation. The recommendations of the research highlight the importance of growing national production, and in particular, ensuring growing production is effected in tandem with high quality of the coffee as this is where Kenya has a competitive advantage. Further the demand for better quality coffee globally continues to increase and premium prices are paid for quality. Recommendations in relation to domestic coffee consumption relate to the need to roll out a national coffee drinking promotional campaign based on a sound understanding of factors that drive local consumption. Such measures will see an increased appreciation of coffee drinking and has strong implications for the nation’s economy driven that increased local coffee consumption has the potential to enhance the domestic economy through growing demand for complementary goods and services. The potential multiplier effects on other industries within the overall economy are significant and these initiatives should see the industry take great strides forward and tap into the as yet unrealized potential