‘Uganda’s beer market still has room for growth’

Your close competitor has set a target of 3 years to gain back market leadership. What are your thoughts on this?

This is a competitive market and we all have to fight for market share and there are different ways of doing that. Whether it is the quality of the liquid, packaging, marketing campaigns or the way we manage sales and distribution. We do not believe in buying market share with price drops. That is an easy way out and is very temporary. Consumers think they are getting a great deal with price cuts, but the best deal you can offer consumers long term is to continually invest in quality, innovation and consistent supply.

We do believe if we consistently continue to produce great products and do a great job selling those products then we gain. In 2007 our share was in the area of 40%. We have been able to grow by focusing on doing everything well. They will have to do better than us in excellence or drop price to catch up.

Last year, global brewer Anheuser-Busch InBev (AB InBev) acquired your parent company SABMiller operations in a deal estimated at over US$ 100 billion.  Can you explain the restructuring and re-organization that has come with the new investor?

SABMiller and AB InBev are very similar companies. We are both companies that are passionate about beer and driven by success.  But there are some ways in which they are different from each other. SABMiller tend to have a lot bigger head offices contrary to the AB InBev. For instance, SABMiller had two head offices in South Africa, a head office in Switzerland, London, Myanmar, London and others around the world. Now AB InBev doesn’t believe in big offices. So, we are certainly seeing a lot of these regional offices shut down and so are a number of job losses that run in thousands of people globally.

There were some markets where both SABMiller and AB InBev were direct competitors including Europe and South America and there was need to merge them and cut costs. On the other hand, AB InBev has no presence in Africa at all. So for them Africa is completely new market. And therefore the new acquisition has little impact in Africa unlike in any other parts of the world except in South Africa where there’s a view that there’s no need for those two head offices.

Media reports suggest that you and many others were affected with the new transaction in terms of job losses. What is your comment on this?

 There have been a few positions affected, but they make up a very small percentage of our staff complement. Those positions affected result from what ABInBev see as more efficient ways of doing things.

A big transaction like this may have some fallout, but it can also create opportunities. There have also been some new positions created and some people have gained promotions.

In some cases it also offers an opportunity for people to reflect on their personal ambitions. As for myself, I had a new designation under ABInBev as the Operations Director for Uganda, Kenya and South Sudan. I was asked to oversee three countries. So in fact AB InBev had promoted me. However, I decided to take on an opportunity that is closer to family in North America.

As other examples, our Marketing Director Dan Ogong opted to pursue the opportunity to go into business for himself. The former District Manager West, Julius Biingi, opted for an early retirement to venture into a distributor business. He still works closely with Nile Breweries as a distributor in Hoima. These are not forced departures. Indeed our records have been fantastic and ABInBev were keen for all of us to continue. Although I am moving on I am comforted knowing that NBL is left in the hands of James Bowmaker, who has deep experience in our business.

A section of legislators have drafted a bill that will regulate beer consumption if passed into law citing negative impact on the communities including road accidents and poverty. What is your comment on this?

Of all the beer consumption in Uganda, possibly only 15% is not illicit. Uganda’s licit beer per capital is about eight litres. And for comparison purposes, the average beer consumption in Africa is 10 litres, meaning that Uganda is below the African average. In South Africa, the per capita consumption is 80 litres and the highest in the world is Czech Republic, which is 130 litres per annum. This tells us that beer consumption in Uganda is extremely low. As NBL, we maintain that it is not a problem of beer consumption that has had a negative impact on the communities and that there’s significant potential to increase that per capital consumption within the limits of responsible drinking.

What is Uganda’s beer market outlook this year?

 For the beer industry specifically, a lot now rests on the excise duty rates that get passed by parliament. If not amendments are made to reduce the rates to realistic levels, the outlook is certainly negative. Price increases will hurt demand; volumes will drop; tax remittances to URA will fall and purchases from sorghum farmers too will drop, complicating their efforts towards poverty eradication.

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editor@independent.co.ug