Business: EABL To Grow Spirits, Craft Beer And Keg Segments in 2018

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Africa’s largest alcohol beverage company, East African Breweries Limited or commonly referred to as Kenya Breweries Limited recently released their intended strategies for the current year. This comes in the wake of having had a significant drop in market sales last year. This was in part attributed to the electioneering period in Kenya which is the company’s largest market. Its profits for the half year ending December 2017 indicated a 11% drop in profit before tax.

We were given a tour of Kenya Breweries Limited Ruaraka plant. The one thing that was evident from that start is how seriously KBL takes safety issues. There was mandatory safety induction training which is a requirement for everyone who enters the premises for the first time. We were also given mandatory Personal Protection Equipment (PPE) uniforms which included a reflector jacket, earplugs, safety goggles and factory friendly shoes. After completing the safety induction test, our first stop was the at the Spirits line.

 

The mandatory PPE uniform from head to toe.

As of now, there are four functioning lines used to bottle and package spirits. Depending on the production schedule, the spirit is prepared, then bottled and packaged and taken into the market. Each line produces 20,000 bottles of spirit an hour which translates to 6000 crates of spirit a day. There are designated tasters to ensure that the product is up to the required quality before it is bottled.

Packaging spirits into cardboard boxes to take into the market.

Our next stop was the beer production centre. Containing a total of 7 lines, this is the largest processing centre. Depending on the demand in the market, the lines are capable of producing 2.5 million bottles of beer in a day. This translates to 100,000 crates of beer. For both the spirits and beer, the bottles go through a thorough process of washing and inspection before any product is put in them. This is to ensure that no contaminants and broken glass get into the beer. As for packaging keg, the barrels also go through thorough washing process before they are refilled with the keg. Before they are packed, they are weighed to ensure they meet the desired threshold. This is done to ensure that each barrel has the same amount of keg in it.

Filling and packaging of 2.5 million beer bottles a day.

After the tour, we went right into the media briefing led by KBL Managing Director Jane Kariuki, Head of Innovations Fred Otieno, Erick Kiniti the Corporate Relations Director and Andrew Kilonzo the Sales Director. The conversation revolved around KBL’s plans for growth for this year.

Moving forward, Kenya Breweries Limited hopes to leverage more on their best-performing products in the market. They are also looking to leverage their market analysis to ensure that they satisfy the needs of their customers. One of the areas of focus is the beer sector which takes the lions share of the market. The plan is to invest more in its beer brands most especially their Senator brand. Since its introduction to the market, Senator which is meant to curb consumption of illicit liquor has experienced large sales volumes. Last year, KBL added new keg rackers in their Ruaraka Processing plant to increase Senator volumes in the market. This year, it hopes to drive the sales volumes even higher with the launch of their new Kisumu Brewery.

Its focus will also be aimed at a couple of its other performing beer brands.This includes brands such as Tusker which continues to be a dominant player in the market. Another aspect KBL is looking to exploit is the craft beer industry which is a growing trend. Additionally, there are plans to increase the production of its famous draught beer which had fizzled out of the market.

Spirits

The spirits sector is KBL’s fastest growing sector so far. With its mainstream spirits doing so well especially with the millennials, the plan is to leverage the spirits growth and push sales for their premium spirits. The aim is to transform market access to ensure that their spirits are available to all. KBL hopes to leverage brand deals such as the deal they made in 2016 to sign in Sauti Sol as Chrome brand Ambassadors. The band has travelled all over Kenya holding concerts while promoting the Chrome brand. These are relationships the company hopes to keep and to grow.

So far it has invested in an additional sprits line in their manufacturing facility bringing them to a total of 4 lines. This additional line has doubled the company’s capacity to 5 million EU’s.

Innovation

This is one of the most important departments in the organization. It is a key determinant of the company’s growth because it helps come up with new products that better suit the needs of the consumers. It has contributed Kshs 5.4 billion which is 18% of the companies sales. The plan is to establish key innovation brands and target trends or millennials.

As the millennials incomes continue to rise and their lifestyles incorporate a drinking culture, there is a lot to do in that department. For example, the coconut flavoured Kenya Cane has been doing exceptionally well in the market. There has also been a growing need for flavoured drinks in the market and KBL plans on working to see what flavours they can incorporate into their products. To assist with this, It plans on accelerating brand awareness through digital platforms in order to better understand the millennial trends.

Sustainability

Even with plans to grow in order to meet consumer needs, there is also need to maintain standards while ensuring that the company is of benefit to Kenyans. According to the McKinsey 2017 report, KBL is contributing an estimated 0.8% of Kenya’s GDP. Moving forward the company wishes to grow that number.

The company will continue to work towards manufacturing excellence by investing heavily in technology, structures and equipment that drive efficiency and quality of its products. It will also ensure that it promotes responsible marketing through alcohol in society agenda to promote responsible drinking. There are also plans on anchoring its social investment on structured sustainability strategies.

Employment

So far, KBL has 1000 employees. However, the entire process from the moment the raw materials leave the farm to the point the consumer sips the drink (from grass to grain) involves 1.8 million people. The Kisumu brewery which will include more farmers from the region will add 100,000 people to that number.

KBL hopes to have a 50/50 gender balance in their workforce by 2020. The company’s leadership objective is partly based on managing talent. Additionally, its management trainee programs are tailored to produce future leaders of tomorrow. So far they have produced 4 Managing Directors working in their Cameroon, Nigeria and other countries.

Agriculture and Commercial Department

A big part of the alcohol brewing business is sourcing of raw materials from the agricultural sector. As of now, KBL sources 80% of raw materials locally. By 2020, the company hopes to have raised that number by 100%. Right now, KBL works with 31,000 farmers. With the launch of the Kisumu brewery later this year, the number will go up by 15,000.

To ensure that the product gets to the market, KBL works with 57 senator distributors and 45 mainstream distributors. Due to the growth of e-commerce company plans to extend partnerships with sites such as Masoko and Jumia to ensure their customers can access their products on a digital platform.

Responsible Marketing

Last year the company launched ‘Utado?‘ a campaign aimed at promoting responsible drinking. So far the company has trained 27,000 people to spread the campaign. It has reached 1,200,000 people so far and they aim to reach more in the coming year.

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