Kenya Breweries Limited to cash in on rising spirit demand, invests US$9.2m in new processing line

KENYA – Kenya Breweries Limited (KBL), subsidiary of Diageo through the East African Breweries Limited, is set to inject Ksh1 billion (US$9.2m) in the establishment of a new spirit processing line, in a bid to meet the high demand witnessed in the segment.

According to reports by Business Daily, the investment will be used to acquire new line machinery and expand storage capacity at KBL’s sister company, UDV Kenya.

This will enable KBL to begin local production of new international spirit brands, while ramping up volumes of those already being produced in the country – such as Gilbey’s and Smirnoff Red Vodka.

The firm says that demand for spirits has been growing faster than that of beer and the trend has been reinforced since the onset of Covid-19, justifying the need for an additional spirits line.

“Our spirits volumes have increased and it is an opportunity to raise production by having an additional line,” said KBL managing director John Musunga.

In the half year period ended December 2020, EABL recorded a net sales decline of 3 percent to Ksh44.5 billion (US$404m) compared to the corresponding period in 2019.

However, the company’s spirits net sales grew by 10 percent, partially offset by beer sales which declined by 8 percent against the same period last year.

“Spirits will have an increased role to play in our overall business than they used to do a few years back.”

KBL Managing Director – John Musunga

During the pandemic period, reduced visits to entertainment spots, restaurants and pubs where beer consumption is traditionally predominant, hampered the drink sales, making consumers shift to spirits which are also fitting in the off-trade markets.

“Spirits will have an increased role to play in our overall business than they used to do a few years back,” Musunga added.

Many consumers are shifting to mainstream and premium spirit brands since they cost less than beers and also come in a wide range of tastes.

ADVERT

The company has already realized significant benefits from its spirits production line – which has allowed it to slash costs associated with logistics and importation of international brands.

In 2017, KBL started local production of Captain Morgan Gold —both 250 millilitres (ml) and 750ml at the UDV Kenya distillery. As of 2021, it also locally produces Smirnoff Red Vodka and Gilbey’s – a popular gin brand.

Further to that, the company has cut out a substantial market share among the millennials, who are increasing the number of people entering the legal drinking age and opting to debut with spirits.

This is evident by the company’s recent introduction of Chrome Gin and Best Gin, added variants of the Chrome Vodka and Best Whisky respectively.

KBL has also recently expanded its spirit category with launch of a new gin in the market dubbed Tanqueray Flor de Sevilla.

Other than in Kenya, Diageo has been introducing new spirit variants in Africa at a time when the gin wave is exploding in the region coupled with changing consumer tastes and preferences.

In Uganda, the alcoholic beverage major introduced Gordon’s Premium Pink Gin, through Uganda Breweries Limited (UBL), while in South Africa, the company launched Orijin Marula, made with real African fruits.

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE

Related Posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.