CAPE TOWN, South Africa – When most multinationals began moving out of Kenya, it opened the door to an influx of new lubricant market players, a Kenyan lubricants distributor official told Lube Report on the sidelines of a conference here last month.
Having that in mind and knowing that [most of] the multinationals have moved out of the country, there is certainly somebody who is taking their position and their market share, Jonathan Njine, managing director of lubricants distributor Lubesol Kenyan Ltd., said at the ICIS Africa Lubricant and Base Oils Conference.
Every day we have new players on the market. For lubes, I dont think we have statistics gathered somewhere saying ‘these are the number of lube players,’ but every day we have new ones coming into the market, he told Lube Report.
Njine categorized the new players into three broad groups. The first new group consists of lubricant blenders, which have links with Middle East suppliers based in Dubai or Turkey, and a second group consists of blenders that are starting their own brands in Kenya. The third group of new players in Kenyas lubricants market get their products from all over, he said, and, in some cases, distribute products with questionable quality standards.
Additionally, Njine noted that the majority of the new players source their base oils from Middle East suppliers. Despite the influx of new lube players, multinationals such as Total and Shell still dominate the Kenyan lubricant market, he acknowledged.
Speaking about challenges facing new players in Kenyas lubricant market, Njine expressed concern over whether or not these new players can survive, as they primarily focus on the automotive market without considering other segments. He said many new players on the Kenyan lubricant market focus on low prices rather than product quality, asserting that only new players who think away from a commodity-focused market [and instead towards] quality-driven products will grow in the long term.
While Njine acknowledged the entry of original equipment manufacturers in the Kenyan car manufacturing sector, he noted it would not make much impact in terms of a shift to the use of API Group II base oil in lubricant formulations. That is because many Kenyans prefer to buy reconditioned carsinstead of new cars. The market in Kenya for lubricants formulated with Group II base oil is very minute, accounting for less than 5 percentof the countrys lubricant market, he said, while the market share for synthetic lubricants is estimated at only about 2 percent. The Kenyan lubricant market, he emphasized, is still dominated by products formulated with Group I base oil.