Across East Africa, NGOs, development agencies, and for-profit enterprises have experimented with the production and sale of briquettes. This low-cost, energy-dense fuel can be produced from waste agricultural residues and charcoal dust (1). Chardust Ltd. is the largest briquette producer in East Africa, producing 200 tons of charcoal briquettes each month (2). How can Chardust Ltd. maintain its competitive advantage? Would Chardust Ltd. benefit from coordination with other briquette producers?
Briquettes as a Tool to Mitigate Climate Change
Adoption of alternative fuels can mitigate the impact of climate change in East Africa. Relative to traditional fuel sources such as firewood and charcoal, briquettes reduce the rate of deforestation and soil degradation. Additionally, briquettes are more energy efficient and emit fewer greenhouse gases (3). Given its role as the briquette market leader, Chardust Ltd. is well positioned to capture increased demand for alternative fuels driven by East African governments and international organizations. Over the past few years, Chardust Ltd. has increased its briquette production and introduced a consulting service to assess feasibility and to train producers in other regions (2).
Challenges and Opportunities for Increasing Briquette Demand
Despite its size, Chardust Ltd.’s success in Nairobi, Kenya is limited to two niche, urban markets: large-scale commercial consumers and high-end retail markets (4). Chardust Ltd. has not entered the mass household charcoal market in rural regions due to social and cultural barriers (5). Thus far, consumers are not willing to pay more than the price of charcoal for an environmentally-friendly fuel. Furthermore, families are unwilling to adapt their cooking habits for this new fuel (4). To maintain its competitive advantage, Chardust Ltd. should commission a marketing study to understand consumer preferences; they could use this data to tweak the product formulation and reduce barriers to briquette adoption.
Additionally, Chardust Ltd. should coordinate with other producers to grow the household briquette market. Developing uniform product standards would increase consumer confidence in the industry (4). Marketing activities would enable producers to educate consumers on the economic and environmental advantages of briquettes (4). Lastly, producers may be able to reduce the effective price for briquettes through collectively lobbying the government to waive taxes or to introduce subsidies (1).
Challenges and Opportunities for Increasing Briquette Supply
Although Chardust Ltd. is already recognized for its operational excellence, the company should continually seek opportunities to increase its supply of briquettes. Many of Chardust Ltd.’s competitors have difficulty funding the large upfront investment in imported commercial equipment (4). Chardust Ltd. should maintain this competitive advantage through repairing its current equipment and upgrading to newer models with higher capacity when it has cash on hand. Additionally, Chardust Ltd. should continue to add new revenue streams so it is less vulnerable to the decrease in production during the rainy season (1). For example, Chardust Ltd. could explore selling carbon credits or implementing cogeneration of electricity and gas with briquette production (4).
Maintaining Chardust Ltd.’s Competitive Advantage
As governments grow increasingly concerned about climate change and promote the alternative energy agenda, Chardust Ltd. is well-positioned to scale its briquette production. To maintain its position as the market leader, Chardust Ltd. should increase its briquette supply and generate additional demand from the household charcoal market. However, Chardust Ltd. should recognize that briquettes are just one of many alternative energy solutions to mitigate climate change. Energy studies reveal that few households or commercial consumers will use briquettes exclusively; instead, briquettes will be one option in a diversified energy portfolio (1). Therefore, Chardust Ltd. should stay up-to-date with emerging alternative energy technologies and experiment with those which may be suitable within the Kenyan context.
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- John Mitchell, “Charcoal Briquette Enterprise Development,” EPA, March 5, 2014, https://www.epa.gov/sites/production/files/2014-08/documents/QA_Webinar_3.5.14.pdf, accessed October 2016.
- Chardust Ltd., “Our History,” http://www.chardust.com/briquettes/, accessed October 2016.
- Nandani Shekhar, “Popularization of Biomass Briquettes: A Means of Sustainable Rural Development,” Asian Journal of Management Research (2010), Elsevier accessed October 2016.
- Tuyeni Mwampamba, Matthew Owen, and Maurice Pigaht, “Opportunities, Challenges and Way Forward for the Charcoal Briquette Industry in Sub-Saharan Africa,” Energy for Sustainable Development 17 (2013), 158-170, Elsevier accessed October 2016.
- Partnership for Clean Indoor Air, “Chardust Ltd,” http://www.pciaonline.org/chardust-ltd, accessed October 2016.