The current state of Kenya’s label manufacturing industry is changing, partially driven by regional growth and rising consumer demand. Despite recent stagnation, expanding manufacturing units and the need for diverse labelling applications across different sectors show promising market potential.
While the labelling industry in Kenya has not yet reached its full potential, its development is supported by changing demographics and the increasing demand for finished products among consumers. Additionally, sustainability trends and technological investments are positioning the industry for future growth.
There is, and will continue to be, a strong demand for a wide variety of labels across different sectors, particularly within:
In the labelling world, the size of the label market is often described in square meters. Approximately 30 square meters of the market will need self-adhesive labels. For alcoholic beverages such as beer, the label production volume will most likely be much, much bigger.
Estimates show that about 90-95% of labelling needs are met locally, meaning finished labels are not heavily imported into East African markets. Additionally, multiple label manufacturing units have been set up in the region, including Skanem Africa’s newest facilities in Uganda and Tanzania.
As the economy develops, further investment will be made in label manufacturing in the area as more finished products reach consumers.
However, one of the biggest challenges within the industry is the growth of flexible packaging. Much of the information that is normally included on labels can be printed directly onto Flexo packaging, meaning that this trend could reduce the demand for traditional labels and, thus, impact label production.
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Despite stagnation in label production in recent years, eco-friendly labels are certainly still at the top of many brand owners' minds, particularly multinationals.
National brand owners in the region are gradually catching up, and we are certainly seeing a big shift in inquiries here at Skanem Africa, including requests for:
Paper and fibre-based materials are particularly in the wind right now after experiencing a decline. We expect sustainable solutions to gain momentum in the coming years.
Plastic materials are at relatively stable levels right now, and plastic packaging is still prevalent. Self-adhesive labels, for instance, are still required for PET and HDPE bottles.
Read more: A guide for choosing cost-efficient and sustainable label materials
One of the biggest cost drivers currently is the actual substrate itself, as well as the inks and varnishes added to the labels. These factors equal about two-thirds of the total cost of the product.
Secondly, we have the cost of converting the substrate into labels, which requires labour, electricity, and more. Electricity costs are high in Kenya, and labour costs are rising as well.
Lastly, distribution and transport costs must be added to the label's cost, driving prices upward.
When comparing the regional and global investment climate, it’s evident that there are some ongoing challenges in Kenya which must be addressed to lift the industry:
Investing in new technology that enables greener production is now becoming more widespread across the region. At Skanem Africa, we have implemented several initiatives to increase sustainability levels in our manufacturing processes, including:
Although these solutions are costly, they are a better fit for the environment.
Read more: Balancing material and energy consumption in sustainable manufacturing
Companies and brand owners who are committed to long-term growth should be optimistic about future changes. At Skanem Africa, we will continue investing in sustainable solutions and cutting-edge technology to bring innovation and stay on top of the market.