Tanzania, Uganda and Kenyan markets are in the spot light as the world’s largest brewers pump in millions of dollars in new investments
Seni Adetu, chief executive officer at East African Breweries (EABL) likes to play his cards close to his chest in the battle for control of the lucrative East Africa beer market.
But when he leads a team of top executives from the Nairobi-based brewery to Tanzania on Tuesday this week for the planned commissioning of a new plant in Moshi, his game-plan is fairly clear. The battle for the Tanzania, Uganda and Kenya beer markets is intensifying as the two world’s largest brewers pump in millions of dollars in new investments.
SABMiller is rolling out a $120 million investment in its Tanzania and Uganda subsidiaries, seeking an edge over its bitter rival Diageo.
Diageo’s East African Breweries is bidding for the Tanzania market through Serengeti Breweries Ltd where it has acquired a controlling stake.
Its new plant in Moshi— it already has breweries in Dar es Salaam and Mwanza — is expected to increase Serengeti’s production capacity by at least 50 per cent.
Serengeti is Tanzania’s second largest brewer with at least 17 per cent of the country’s total beer market.
SABMiller said it was pumping $70 million into its Ugandan subsidiary Nile Breweries to boost its capacity while $80 million will be invested in Tanzania Breweries’ plants in Arusha, Mwanza and Mbeya.
The firm said the new investments will tap into the growing demand for beer in the two markets, as well as in Zambia and Ghana — the two other markets, which will receive a combined new injection of $110 million.
Diageo is thinking along the same lines. “We see good growth opportunities in both Uganda and Tanzanian markets, and so are investing heavily in marketing to build our brands and build capacity. That is why were are opening the new Moshi Brewery,” said Brenda Mbathi, EABL corporate relations director.
In Kenya, SABMiller has been stepping up its presence in the country after it purchased Crown Beverages, taking control of family-owned Crown Foods, the bottlers of Keringet drinking water.
Mid this month, SABMiller announced a promotion for its two canned products — Redds and Castle Lager — in Kenya seeking to reward distributors and bar owners who buy in bulk.
“The positive economic backdrop in Africa, very favourable demographics and current low levels of consumption underpin our confidence in making additional investment to meet the strong demand for our products in the region,” said Mark Bowman, managing director of SABMiller Africa adding that, this was in addition to the $1.5 billion that has already been invested in Africa in the past five years. The new investments come at a time when SABMiller is finalising its divorce with EABL to end a partnership that allowed the firms to produce and market each other’s products
A joint venture between the two brewers meant to help stop the huge revenue losses they had suffered in a battle for control of Kenya and Tanzania beer markets ended on the rocks mid 2009, plunging the partners into an expensive legal battle.
Now, the duo are finalising the break-up. Diageo’s EABL arm is set to pay SABMiller’s African unit at least $215 million for the 20 per cent stake that it did not already own in Serengeti.
In turn, EABL is selling its 20 per cent stake in SABMiller’s TBL through a public offering at the Dar es Salaam Securities Exchange which closed last Friday.
But in Kenya, the giant brewers are also facing increased rivalry from Keroche, Kenya’s second largest brewer, which has several beer brands in the market including Summit Malt and Summit.
They also have to contend with the Sierra brand, brewed by another local brewery, imports and even spirits from firms such as government-owned Kenya Wines Agencies Ltd.
