E-Malt.com News article: 3530

Africa: Just over two years after SAB-Miller subsidiary, Castle Brewing Ltd, left the market to East African Breweries, an Egyptian Heineken establishment has started pushing beer into Kenya. Al Ahram Beverages Company (ABC) was acquired by Heineken NV in 2002. Given that Egyptian manufactures are zero-rated under the Comesa free trade area, the Kenyan clear-beer monopoly has reasons to re-strategise. Entry of the Egyptian beer into the market follows hot on the heels of a similar thrust by Namibian beer, Windhoek, All Africa revealed in a statement on October 26.

ABC is a solid listed firm in Egypt, with a plant that has a capacity to churn out 500,000 hectolitres of world-class products. It exports products all over the Middle East. Fifteen per cent of the 70 million Egyptians are coptic Christians.

Interestingly, Kabete, established in 1958, is a subsidiary of Karume Investments, which was at the vanguard of a consortium going by the name Donyo Sabuk and owning 35 per of the Thika-based Castle. The consortium was bought off after Guinness Plc (owning most of EABL shares) exchanged their holdings in Kenya for part of SAB-owned Tanzania Breweries. EABL closed down their Kibo Breweries.

A spokesman for Kabete Distributors, Karanja Mbugua ,nevertheless revealed that they would initially target the self-selection stores and supermarkets for distribution. This in turn means that the target clientele is mostly the middle-class consumer; the one with what is known as discretionary income. In turn, it means that most buyers should be home consumers and picnic aficionados.

For good measure, the firm is offering canned beer, a staple that was really popularised by the EABL-SAB market dog-fight of the 1990s. Industry players even then acknowledged that canning beer locally would not make business sense. But Kabete knows that margins can be made with zero-rated beer which comes loaded with low Egyptian cost of production.

It is unlikely that the tariff status can easily change, given that Kenya is enjoying reciprocation on bulk tea exports to Egypt. Tea is the top foreign exchange earner for Kenya, and has often been trapped in the trade wars between the two - being Egypt's favourite fall guy.

In September, Kabete launched four varieties of beer - though it is reliably known that they are unlikely to launch their non-alcoholic beverages soon. The first one is the 330ml Meister Lager that has a recommended price tag of Sh70. It has an alcoholic content of 5.2 per cent. Then there is the 500ml can of the same going for Sh90.

The more potent Meister Max Lager with an alcoholic content of eight per cent retails for Sh100 a pint. It is the strongest in the Egyptian market and is set to assume the same knock-out mantle here. Sacker Gold of the same quantity retails at the same price. Kabete says this compares well with EABL actual prices in the income segment they will compete in.

The beers have a retail margin of between Sh10 and Sh14. "We are offering quality alternatives in the market. We cannot say we are competing with EABL," said Mr Karanja.


27 October, 2004