BUSINESS: Vimto returns to Ugandan market

But there’s fear the new beverage may cannibalize some of its sister products

Kampala, Uganda | ISAAC KHISA | Vimto, a global beverage brand, has made a comeback to the Ugandan market after the British manufacturer; Nichols offered licensing terms to Century Bottling Company Limited, a franchise bottler and distributor of Coca Cola products.

The new beverage, a combination of raspberry and blackcurrant flavours with a secret blend of 25 herbs and spices, is being manufactured at the company’s two plants –in Kampala and Mbarara. Vimto was last produced in the country 15 years ago.

Conrad Van Niekerk, the managing director at Century Bottling Company Limited told The Independent that the increasing popularity of the beverage on the African continent prompted the company to introduce it on the Ugandan market.

“In the past decade, Vimto has become increasingly popular across Africa, and with the fond memories that some Ugandans have of Vimto, the time seems ideal to re-introduce this refreshing and unique drink,” he said.

Niekerk said the beverage company believes that the unique taste and quality of the drink trading at Shs1, 000 for a 350ml bottle and Shs1, 500 for 500ml, will appeal to all age groups and cut across all segments of the Ugandan society.

Presently, Vimto is sold in 85 countries across the world mainly in the Muslim countries, with more than 30 within Africa including; Eritrea, Ethiopia, Ghana and Djibouti.

The new development comes at the time Century Bottling Company Limited appears to be losing grip as the market leader in the country’s beverage industry to its close rival Crown Beverages limited, a franchise producer and distributor of Pepsi Cola, Mirinda Fruity, Mountain Dew as competition intensifies in the soft drinks industry.

Century Bottling Company Limited is also facing an onslaught from Harris International Limited, the producer of Riham beverages whose products are relatively similar to the former’s products in flavour and sold at a slightly low price.

For instance, while Century Bottling Company Limited is selling its 350ml bottle of soda at Shs1, 200, Crown Beverages Limited and Harris International Limited are selling the same volume at Shs1, 000.

“At the moment, things are not good. Our sales have dropped by more than a quarter as a result of competition from Harris International Limited, which is selling products that are almost similar to ours but at a low price,” said one Ivan, a manager at Abutech Enterprise Limited, a distributor of  Century Bottling Company Limited in Kampala.

“Looking at Harris Sodas, Riham Cola tastes almost exactly like our Coca Cola, their Lavita tastes same like our Novida, same to Riham Fun Time with our Fanta.”

He said as a result, their sales have dropped from 500 to 300 cases per day as consumers seek for alternative drinks offered by the competitors.

Analysts fear that Vimto may end up cannibalising the Fanta Fruity blast brand, instead of stirring competition to either one of the Harris International Products or Crown Beverage Limited’s Mirinda Fruity as the flavours of the three brands are almost similar.

Though these companies are guarded on their market share numbers, going by their production volumes and distribution networks, Century Bottling Company Limited currently has the upper hand as its annual production stands at 25 million cases compared with Crown Beverage Company Limited’s 20 million.

This signals Crown Beverages Limited’s recent aggressiveness to reduce the market share gap over the past two decades. In 1993, the company was producing merely 2.4million cases of soda annually.

On the other hand, Harris International was producing 34,000 cartons (a carton has 12 sodas) of soda per day as at the end of 2013 making it the third largest producer of soda in the country. However, the figure could have gone up with the recent expansion.

Over the past few years, beverage firms have been increasingly turning to emerging markets such as Africa to bolster their global performance in a bid to compensate for falling consumption in the United States.

Sales of carbonated drinks are expected to increase in Africa, Latin America, Asia Pacific, and the Middle East in the next three years as companies such as Coca-Cola and PepsiCo expand their reach across the world.

Coca Cola plans to invest US$17bn across Africa and US$12.4bn in Mexico, where consumption of soft drinks is among the highest in the world at 135 litres per person per annum. Likewise, PepsiCo plans to invest US$5bn in the Mexican market over the next five years.

****