Frozen Chips for Consumers, Hotels, and RestaurantsFrozen chips production in Kenya is a small market. There is only one producer in Kenya who has 70% market share with an annual production of 60 tons during a few weeks/ months, operating with old written off equipment. The only competitor is McCains, where imports are done by independent traders. The retail price is 2-3 times as high as local chips. Despite a good quality, Kenyan chips are difficult to sell which is due to the high price and the lack of consumer awareness and knowledge. Frozen chips are only sold to consumers in a few urban supermarkets. Restaurants where the bulk of chips consumption is use fresh-cut chips. Consumers prefer take away (fried chips) as it is cheaper compared to frozen chips.

The key differences between crisps and chips are the equipment cost per kg/hour capacity, the main target market which are restaurants for chips and consumers for crisps. Furthermore, you can produce 2kg of chips or 1kg of crisps with 4kg of fresh potatoes. Profitability shows that frozen chips production is barely profitable at the moment. To sell for 120KES/kg in a supermarket, the maximum factory sales price is 77KES. To sell for 100KES/kg to restaurants, the maximum factory sales price is 88KES. Kenya’s variable costs are 83% higher than in Europe. Kenya uses 50% more potatoes but they seem to be much cheaper than in the EU and regular processing potatoes in Kenya. A low price is only possible because production is only a few weeks/months of the year.

Kenya uses twice as much frying oil at a price that is 63% higher. Labor costs are 4.4 times higher, electricity costs per unit are much higher, and the costs for steam using wood are much higher than using oil. But even with strong improvements, cost-price remains too high. Even though the variable costs can be decreased, the investments in equipment will drive up the fixed costs. At the moment it is difficult to reduce sales prices to a level where more can be sold. With the current situation frozen chips production is done at large scale and market is too small to make production economic. The market in Kenya is not competitive compared to small fresh-cut chips factories.

Frozen Chips for Consumers, Hotels, and Restaurants
Frozen Chips for Consumers, Hotels, and Restaurants