Bar business is lately considered the most lucrative business with the quickest return on investment. Infact, when you drive in Kampala and the neighborhoods, there is an average 2 bars for every 100 metres. Previous research commissioned by a leading international premium brand revealed Uganda had over 54,000 alcohol sales points including bars, bufundas, kiosks and duukas that trade in alcohol and other brews. This was the highest in the region considering the fact that Kenya and Tanzania that have bigger populations than Uganda had 37,000 and 28,000 outlets respectively.
Do Ugandans still drink beer?
Uganda has in the past years been ranked one of the countries with the highest consumption of alcohol per capita in the world. Uganda’s average is at 4 litres of alcohol per person per year beating the likes of Kenya and Germany that are considered the “Bottle kings”. However, it turns out this information is flawed because the beer industry contributes just 9% of that quantity with the rest being illicit brew like tonto, waragi, kwete, changaa, enguli and other locally packed rudimentary brews in sachets commonly known as “kaveera”.
The two leading breweries Diageo owned Uganda Breweries and SabMiller now INBev owned Nile Breweries are seeing their sales dip, their fortunes dwindle with this “Kaveera” revolution that sees most Ugandans prefer quick, cheap and “easy knock-out” drinks in sachets over the high end premium and mainstream beers. “The situation is alarming. These “buveeras” are taking us down. They are the preference of alcohol consumers because of their price, availability, easy consumption mode and their high alcohol (ABV) by volume content. People want to get high at a less cost. Our beers are picking dust at bar counters” says John a Sales Representative with Uganda Breweries.
Can the beer compete?
Beer companies continue to innovate to tap into the growing number of consumers. Uganda breweries last December introduced the low cost Buganda kingdom backed Ngule beer which in such a short span has surpassed its target volume sales. They also unveiled the “Black Bell” which is turning out to be a favorite of many. This feat though is attributed to its low cost, use of local ingredients, backing by Buganda kingdom and appeal to low class beer drinkers. Uganda breweries distillery division that majorly makes Uganda waragi also went into overdrive producing and launching different varieties for the popular waragi brand besides going down low to produce sachets and 50ml bottles. This though seemed to work against them with some consumers thinking that was a downgrade!
The premium drink segment is also struggling. Premium market leaders Heineken have had to contend with competition from new entrants like Bavaria which introduced 330ml bottle and the traditional Castle lite, Tusker malt, Nile Gold and a rebranded tusker lite. Heineken went further down encouraging stockists to reduce price to 4,000 from 6,000 shillings. The premium beer segment accounts for just 3% of the 9% of beer’s contribution on the amount of alcohol consumed in Uganda.
Nile breweries which invested a whooping sum of money in a plant in Mbarara haven’t been spared the brunt of changed consumption patterns. The initial thought was to get a second plant to help the aging one in jinja and increase on supply but have had to cut down on production with less demand. Nile breweries also lost most of their market leader share to a newly revamped Uganda breweries.
Is there hope for the beer industry?
With just less than 10% of alcohol consumers to fight for, beer companies face a grim future. Already Uganda breweries who are the market leaders are laying winning strategy. Besides changing leadership at the top- dumping Nyampini Mabunda for a fresher Ugandan MD Mark ocitti, UBL seems poised to maintain the market leader position that they snatched from a struggling Nile Breweries that made a number of marketing and position gaffes over the last two years.
Uganda breweries have strengthened their spirits division. They poached Juliana Kagwa from Heineken to head the marketing segment while repositioning John Walker, Uganda waragi- Spirits that lately seem to be the favourite choice of drinkers. Nile Breweries on the other hand let go of most sponsorships that were not getting them sales and other errors like the 330 ml bottle of their top seller- Club too faced the axe. In the premium segment, Nile Breweries also dumped Grolsch while increasing support for their mainstream brands that are moderately priced and can compete on the price lining.
Final verdict
The beer industry will continue to struggle in the coming years. Alcohol consumers drink preference patterns have changed to the low cost spirits which are considered price friendly and healthier, while for the low income drinkers, the availability of thousands of cheap local brew and hard knocking sachet packed drinks is a delight to many who want to get high at a low cost. Beer companies now have to decide on their pricing, availability and other attributes like easy packaging to survive. It is a tough territory, only the brave will survive.
