Beer distributor accuses Diageo of threats in supply deal war with EABL

Global beer maker Diageo Plc, a majority shareholder of East African Breweries, has been dragged into a fight between its local subsidiary and its largest distributor over supply route contracts.

Distributor Bia Tosha has enjoined the UK company in a case against EABL accusing it of intimidating suppliers from dealing in rival manufacturers’ products for the benefit its local subsidiary.

Bia Tosha, which is fighting for exclusive control of 22 supply routes in Nairobi, holds that Diageo has sent it threatening messages to strong-arm the distributor into shunning other manufacturers’ products.

The firm adds that Diageo shared with its employees a video of former Singapore Prime Minister Lee Kuan Yew’s famous ‘Iron’ speech to show them how to deal with Bia Tosha’s insistence on supplying other brewers’ products.

“In yet another telling sign that Diageo was intent on ‘killing’ the petitioner through intimidation, Diageo posted the following message (video link) to its employees in Kenya on how to deal with Bia Tosha, which is the 1980 Lee Kuan Yew famous ‘Iron’ speech. It is the same threat that Diageo continues to use to intimidate its distributors in Kenya,” Bia Tosha says.

The distributor wants Diageo and its local firms —EABL, Kenya Breweries Limited and UDV Kenya — compelled to grant Bia Tosha exclusive ownership of 22 supply routes, and still be allowed to distribute products from rival brewers.

READ: EABL’s distributor gets order barring brewer from picking replacement

But EABL, in court filings, maintains that the contracts it has with distributors are not exclusive, and has asked the High Court to refer the dispute to arbitration as per the terms of the agreement with Bia Tosha.

KBL managing director Jane Karuku has denied the intimidation claims, saying the brewer only appointed other distributors to the 22 routes in dispute after evaluations revealed that Bia Tosha is unable to adequately service the areas.

Ms Karuku adds that the messages Bia Tosha claims were used to intimidate it were not threats but personal opinions held by Guinness Cameroun MD Kimani Mwaura who is a friend of the distributor’s boss.

She adds that Bia Tosha director Anne-Marie Burugu is using the messages to unfairly tilt the case in the distributor’s favour.

“I am informed by Mr Kimani that he and Ms Burugu know each other personally and he considered her as a friend and a business partner.... Mr Kimani considers the publishing of these messages to support Bia Tosha’s claim as a deep betrayal of trust and friendship by Ms Burugu,” says Ms Karuku.