State of label manufacturing in Kenya

The label manufacturing industry in Kenya caters to a diverse range of sectors, including food, beverages, personal care products, and industrial and retail goods. In a recent interview with Sachen Gudka, Managing Director of Skanem Interlabels Nairobi Limited, the state of label manufacturing in Kenya was discussed in detail. Gudka highlighted the impact of regional growth on Kenya's label industry, emphasizing the export opportunities to neighboring countries driving the sector's development. While the East African region has experienced substantial growth in label manufacturing, Kenya has seen a more stagnant trend in recent years. Gudka pointed out that the size of the label market in Kenya is estimated to be around 30 million square meters for self-adhesive labels, with certain segments like beer labels commanding even larger volumes. Despite facing challenges such as declining demand in some product categories, Gudka mentioned that local manufacturers meet about 90 to 95 percent of Kenya's label needs domestically, with limited imports. This underscores the competitive strength of local producers in the market. One of the key challenges highlighted by Gudka is the shift towards flexible packaging and sustainability initiatives within the industry. As brand owners explore alternatives like paper packaging and eco-friendly materials, the demand for traditional labels may be impacted. Gudka also discussed the cost drivers in label manufacturing, citing substrate materials, inks, conversion costs, labor, electricity, and distribution as significant factors. Technological advancements in the industry, particularly around sustainability, have led to initiatives like solar panel installations and LED lamp conversions to reduce environmental impact. There is a growing demand for eco-friendly labels in Kenya, driven by multinational brand owners' sustainability goals. Gudka emphasized the need for local manufacturers to adopt sustainable practices to align with market trends. When it comes to profit margins, Gudka noted declining trends due to increased competition, currency volatility, and reduced market volumes. While government support for label manufacturers in Kenya has been limited, Gudka expressed optimism about long-term investments in cutting-edge technology and innovation to drive growth. Looking ahead, Gudka mentioned emerging opportunities in new markets like Tanzania, Uganda, and Ethiopia, signaling a strategic expansion for Skanem Interlabels. The company is investing in a new factory in Tilisi with IFC edge certification, demonstrating a commitment to growth and sustainability. By positioning themselves closer to customers in key markets and continuing to invest in technology, Skanem Interlabels aims to stay ahead in a competitive industry landscape.