Beer distributors bank on PR, technology to survive price increase

Beer distributors are looking to technology and public relations campaigns to sustain the flow of customers.

The recent increase in taxes levied on beer has seen business activity, and therefore sales, dwindle. Now, for instance, the recommended retail price for Tusker brands is an average of Sh30 higher than it was in November. This means by the time these products reach bars and restaurants, the price increase could be a lot higher.

Wanjiku Kirika, 32, manages operations at one of East African Breweries’ (EABL) distributors, Kamahuha, and such tax increments are not always justified.

“We are not against increasing taxes, but the over-dependence on beer to fund a bigger chunk of the Budget is unreasonable,” she said in an earlier interview.

“If the State would provide a better environment for doing business, through infrastructure developments, for instance, then it would be acceptable.”

Continuous adjustments to the taxes levied on beer has seen EABL package its products in smaller quantities to keep prices low and boost sales volumes.

With heavy expenses incurred in risk insurance and a small profit margin of 5 to 7 per cent, Ms Kirika said the only option left for distributors hoping to remain in businesses is to minimise operating costs and cement relationships with customers.

“For us, we had to adopt the Enterprise Resource Planning (ERP) to get rid of the long ledger sheets used to monitor and keep records of cash. With ERP, we monitor the flow of cash from when it is liquid to when it is converted to products or services, which has improved our systems,” she said.

She also operates a cashless system, which has reduced expenditure on security personnel.

Build rapport

Further, Kirika regularly visits her customer base of 1,100 to build rapport and find out how their businesses are doing, particularly if their visits to the Kamahuha warehouse for restocking have reduced.

“Sometimes a product does not sell because the retailer is not consistent with stocking, so customers opt for other outlets.”

Kirika, who took over the 25-year-old family business when she was 25, said her initiatives have seen the business grow steadily, and it has since acquired six more trucks and motorbikes to increase distribution consistency, especially in hard-to-reach areas.

She expects these measures to see the business through the tough times anticipated with the new tax regime.

But she is hopeful business will continue to grow, as the beer market is still attracting newcomers due to the relatively low consumption of beer per person in Kenya.

For instance, in February, Centum Group joined the sector after acquiring a franchise contract to distribute Carlsberg Group’s over 400 brands. Carlsberg is ranked the world’s fourth-largest beer brewer.