New cement players grab share from major rivals

11 August 2017

Mombasa Cement is now Kenya’s second biggest player after leading new players to grab market share from established firms such as Bamburi and troubled Portland Cement.

The maker of the Nyumba brand, which began operations in 2007, now has a market share of 15.8% to rank behind Bamburi’s 32.6% as at end of 2016, according to research by Standard Investment Bank.

East African Portland Cement Company (EAPCC) has been dislodged from second to third position with a market index of 15.1%, slightly ahead of Savannah Cement’s 15.0%.

Listed ARM Cement controls 13.5% of Kenya’s competitive cement industry, with National Cement –maker of Simba brand— ranked the smallest player with a market share of 8%, shows the SIB research.

Bamburi, Kenya’s largest cement maker, has steadily ceded market share from a high of 36% in 2015.

Portland Cement previously controlled a fifth of the market but corporate governance woes have seen the firm plunge into the red.

National Cement was formed in 2008, and Savannah Cement began production in August 2012 to become Kenya’s sixth cement maker.

The report reckons that stiff competition in the Kenyan market has kept cement prices flat, a move that has seen companies turn their focus on new products such as ready mix and high-strength varieties used in mega projects.

“We expect competition in high strength (42.5 & 52.5 grades) and ready mix concrete to intensify as producers respond to the growing demand from large-scale projects,” the research note says. The report notes that “weak individual home builders’ activity” has kept cement prices frozen.

Cement prices in Kenya have stagnated at between Sh630 and Sh700 per 50-kilogramme bag for the past decade. “To retain market share and brand visibility, we expect producers to increase direct market distribution,” says SIB.

Kenya’s cement production grew 5.6% to 6.7 million tonnes in 2016, beating total consumption which stood at 6.3 million tonnes in the review period. The surplus output has further fuelled the price wars, forcing companies to aggressively pursue regional export markets.

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