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Scramble for strong beer market soars

By Moses Michira | July 17th 2016
United Dutch Breweries trade marketer for Africa Elske den Besten, Jovet Kenya Ltd Director Daniel Munene and UDB sales manager for Africa Sander Bos.

A month after a Dutch brewer tested the Kenyan market with strong beer brands, the results have stunned the appointed distributor.

It is a finding likely to cement further the popular perception that Kenya is an overly price sensitive market, heavier beer means better for the average consumer. “It is rather surprising that it is the strongest beer variant that beat all expectations,” said Daniel Munene of the 12 per cent Atlas Beer Brand, manufactured by United Dutch Breweries.

His perspective on the market is unique considering he has for more than two years been the country distributor for another international strong beer brand, German-brewed Bavaria with an alcohol strength of 8.6 per cent.

Atlas and Bavaria retail at Sh200 for a 500ml can - which is comparable to local beverages. For a long time, Bavaria was the strongest beer in the market and had grown to find significant traction, according to Mr Munene.

Kenya is also the fastest growing market for Guinness, a stout with a 6.5 per cent alcohol strength, according to Charles Ireland who left Nairobi-based East Africa Breweries Limited where he was chief executive for three years. It is likely that the growth of Guinness is tied to the switch to value for consumers keen on minimising their spending on leisure drinks.

Driven by dwindling consumption back home, UDB officials arrived in Nairobi early last month in pursuit of new markets. Kenya possessed all the right attributes of a rapidly growing population, rising income levels and most important - last year’s crackdown by the government on ‘second generation’ spirits.

Hundreds of people had died after consuming what they believed was an affordable means to getting high before the ban on dozens of brands. Most affected by the impact of the dangerous brews were the poorer in society, who were provided an immediate market for the uninspected alcoholic beverages, that often contained the lethal compound known as methanol.

UDB’s sales manager Sander Bos told Weekend Business that his firm was bringing a safe and affordable alternative to the dangerous drinks. “There is something for everyone,” Mr Bos said, citing the high alcohol content in the various variants of UDB’s flagship brand, Atlas. After the unprecedented reception of the 12 per cent strength variant, the Dutch brewer anticipates even bigger success for the 14 per cent- and 16 per cent-alcohol beer volume (ABV) drinks.

Regular beers

For the consumer, 16 per cent ABV drink would roughly be equal to four regular beers of equal volume. Beers achieve a higher ABV when the brewing process is extended for up to eight weeks, while the regular beers are churned out in just about a week or less.

And for the ‘most price sensitive market in the World’ as described by Mr Ireland – now the Diageo boss for UK, Ireland and France, a stronger beer for the same price is a lot more value. Munene says the strong beers are made mainly to target ‘tough men’ and his experience has been testament.

In Kenya, EABL has traditionally controlled an estimated 90 per cent of the beer industry, where Naivasha-based Keroche is the only other significant brewer. More than 5.5 million litres of beer – enough to fill a regular football field knee-deep, were consumed in Kenya in 2015, official statistics show.

On average, every Kenyan consumed about 12 litres or a crate of beer. EABL and Keroche who are bitter rivals have however seen little competition from within, when compared to countries like South Africa that have more than 55 breweries.

International consumer research firm Euromonitor reports that despite the dozens of breweries in SA, the biggest firm South Africa Breweries (SAB) still controls around 89 per cent of the market through tens of its brands including Castle – which is also marketed in Kenya.

Castle, like Bavaria and Atlas, has the strong variant. New entrants in the market may have chipped the dominance of EABL, going by the statistics provided by Euromonitor research which now places its share at 71 per cent for 2015.

Younger population

Improving economic environment is projected to support beer consumption moving forward, and possibly opening up more opportunities for more local and international brewers.

“The expected positive economic performance and wide product portfolio from which consumers can select, coupled with the large younger population as a core target segment, are all set to support beer consumption during the forecast period,” Euromonitor says in its forecast.

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