The maker of Pepsi Cola products is in the final stages of constructing a multimillion dollar plant in Rwanda.
Crown Beverages Limited (CBL), the maker of Pepsi Cola products in Uganda is in the final stages of constructing a multimillion dollar plant in Rwanda.
CBL has acquired a five acre piece of land at the Kigali Special Economic Zone planning (KSEZ) at Rwf12 million and construction of the plant is likely to start before the year ends.
KSEZ is designated to accommodate heavy and light industries, large scale user’s industrial plants and information and communication technology park.
Should CBL set up, the investment is expected to stimulate competition in Rwanda beverage market, which has been dominated by Bralirwa.
After partnering with Coca Cola, Bralirwa opened a soft drinks plant in 1974 and produces brands like Coca-Cola, Fanta Orange and Fanta Citron, Fanta Fiesta, Sprite and Krest Tonic.
But the liberalisation of the market and Rwanda joining the East African Community has seen some of the regional competitors in the soft drinks segment enter the market.
For instance, CBL’s products- Mountain Dew, Mirinda, 7UP and Evervess — are imported from Uganda and sold in supermarkets and hotels.
The competition has been heightened by locally made juices also eating up the market share of Bralirwa.
The coming of Azam that is flooding the market with affordable non-carbonated drinks is also partly eating in the Bralirwa clientele.
Investors' concerns
The planned construction comes at a time shareholders of Bralirwa— a listed company on the Rwanda Stock Exchange are concerned about the dwindling profitability of brewer due to the growing competition from both carbonated and non-carbonated drinks currently flooding the market.
Jonathan Hall, managing director recently told journalists that consumption of his drinks is dropping, reducing the company’s profitability.
Half-year profits
The company’s profit after tax dipped to Rwf7,746 million In June 2013 from Rwf7,937 million in the same period under review last year.
The volumes of both soft drinks and alcoholic drinks fell to 783 hectalitres in June this year from 788,000 hectalitres in the same period under review last year.
However, revenues grew by 2.6 per cent to Rwf37,007 million in the first half of this year up from 36,082 million in the same period last year. To remain competitive, Bralirwa has embarked on an aggressive marking strategy, introducing a door-to-door marketing strategy.
“In response to the slowing beverage market, the launch in last July of the new 50cl Primus at a recommended consumer price of Rwf500 ml maintains brand affordability which is key to our consumers,” he said.
Mr Jonathan also said the currency realignment, which took place in the third and fourth quarters of 2012 adversely impacted on the company’s cost base given the exchange exposure on energy and raw materials.