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Beer makers wage turf wars over high-end consumers

East African Breweries Limited (EABL), Heineken, and SAB Miller are aggressively marketing their Tusker Lite and Pilsner Lite, Heineken, and Miller Genuine Draft brands respectively, seeking to capture a larger share of the growing high end beer market. Photo/FILE
East African Breweries Limited (EABL), Heineken, and SAB Miller are aggressively marketing their Tusker Lite and Pilsner Lite, Heineken, and Miller Genuine Draft brands respectively, seeking to capture a larger share of the growing high end beer market. Photo/FILE 

A battle for Kenya’s lucrative premium beer market is looming as rivals launch new brands targeting middle and upper class consumers.

East African Breweries Limited (EABL), Heineken, and SAB Miller are aggressively marketing their Tusker Lite and Pilsner Lite,Heineken, and Miller Genuine Draft brands respectively, seeking to capture a larger share of the growing high end beer market.

The middle and low end segments of the beer market have come under pressure from the new alcohol law that reduces drinking hours and legalises traditional brews.

High inflation, at 19.72 per cent, hasn’t made matters any better.

“The premium beer market enjoys high margins from the rising middle class consumers and major beer firms are working to grab market in this segment,” said Eric Musau, an analyst at Standard Investment Bank (SIB).

“We have seen that even when prices of premium beer brands go up, volumes hold steady and this makes it a critical market for each of the rivals,” Mr Musau said.

Heineken set up an office in Nairobi early in the year, seeking to push regional sales.

The Dutch firm has been spending millions of shillings in recent weeks on publicity to promote its beer across the country since its flagship Heineken beer is mostly consumed in Nairobi and high end hotels.

Expand network

“We are working to expand this network and we’ll be in all urban areas of the country by the end of 2012,” said Koen Morshuis, Heineken’s general manager for East Africa.

He said that the firm will achieve the target by partnering with Maxam Ltd, a local firm that has been distributing Heineken beer in Kenya since 2007.

London-based SAB Miller is also seeking a larger share of the premium beer market. On December 8 the firm introduced the Miller Genuine Draft brand into the market.

The firm, which recently ended a distribution agreement with EABL, will use its Kenyan subsidiary Crown Beverages to sell the premium beer which it will transport from Tanzania Breweries Limited (TBL).

The new beer is owned by US-based brewer MillerCoors, which is 58 per cent owned by SABMiller but is brewed by TBL.

Heineken and SAB Miller are betting on their global brands, expansion of distribution channels, and strategic marketing to grow market share in a region where consumers hardly switch beer brands.

Aggressively marketing

The increased interest in the Kenyan beer market has seen EABL respond by aggressively marketing its premium brands and introducing new beer including Tusker Lite, re-introducing Pilsner Ice and Windhoek. This is aimed at defending and growing its share of the premium beer market that is under attack.

The premium market is becoming an important segment for the brewers as consumers slow down beer intake. EABL reported a one per cent drop in beer volumes in the 12 months to June, but its sales were lifted by an increase in beer prices.

“We expect that the company will be expanding its range of premium beers to crowd the market for rivals and gain a larger market share overall,” Mr Musau said.

Analysts said EABL has a head start in the new beer wars, having one of the largest distribution networks.

The brewer dominates Kenya’s alcohol market with a 90 per cent share mainly through Tusker, Pilsner, Tusker Malt, and Guinness brands, according to Euromonitor.

The firm is also benefiting from its local production that gives it greater pricing headroom compared to Heineken and SAB Miller that have signalled they will rely on imports.

For instance, a 330ml bottle of Miller Genuine Draft retails at Sh150 compared to Tusker Lite and Tusker Malt which cost Sh100 each for a 300ml bottle.

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