EABL takes beer wars to SABMiller’s doorsteps

SABMiller owns 60 per cent of Nile Breweries in Uganda where a vicious battle for market dominance has been raging for nearly three years.

More recently, SABMiller front-run EABL in Southern Sudan with the opening of a Sh2.9 billion plant in Juba in an attempt to consolidate its presence ahead of the competitor.

In November last year, EABL announced it had courted SBL as its sole distributors of its world-class spirit brands in Tanzania adding impetus to a long running battle with SABMiller’s Tanzania Breweries.

Acquisition of SBL signals EABL’s intention to intensify its activities in East Africa to grow profits and reduce it’s over reliance on the Kenyan market that has been showing signs of maturity.

Kenya’s largest manufacturer by market value grew its revenue to Sh18.6 billion in the last six months of 2009 on the back of improved sales of the Tusker and Guinness brands that also benefited from upward price adjustments last November.

“Yes, Kenya is our fortress but at the end of the day we are East Africa Breweries and we must play the East Africa game,” said Mr Seni Adetu, the group managing director in February.

Winning the Tanzania round now leaves EABL to focus on the Uganda market where SABMiller has announced plans to invest Sh1.2 billion in a malting plant to process locally grown barley.

EABL’s marriage to TBL was formalised in 2002 agreement that saw SABMiller cede a 20 per cent stake in TBL to the Kenyan brewer in exchange of a similar stake in Kenya Breweries.

The deal saw SABMiller leave Kenya where it had put up a bruising market share battle against EABL.

The latter also left the Tanzanian market in return.

Under the agreement, the two firms were to manufacture and distribute each other’s flagship brands in their separate territories.

The agreement specifically provided that TBL would grow EABL’s flagship Tusker brand in Tanzania among other brands as EABL did the same for SABMiller’s Castle brand in Kenya.

In the last five years, however, EABL increasingly got impatient with the marriage and embarked on a plot to end it on the grounds that TBL had breached the deal.

In May 2007, when the contract came up for renewal as provided for in the agreement, EABL stepped back and later cancelled it, quickly initiating a similar deal with Serengeti Breweries.

The fight for the Tanzania beer market has recently sparked serious fights between TBL and SBL, who have been accusing each other of unfair competitive prices.