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EABL takes on Keroche with new sugar-free beer

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A quality assurance official inspect a beer at EABL plant. Photo/FILE

A quality assurance official inspect a beer at EABL plant. The firm's sales rose to Sh55.5 billion from Sh44.8 billion in the year to June 2012 , with net profit growing to Sh11.1 billion from Sh9 billion. Photo/FILE 

By Mugambi Mutegi

Posted  Tuesday, January 1  2013 at  18:01

In Summary

  • The regional brewer has unveiled its latest product dubbed Balozi, a malt-based, sugar-free brand, which is targeting Keroche’s Summit Lager.
  • The Balozi launch comes after Keroche announced a Sh2.5 billion expansion plan that will see it grow production capacity tenfold to 100 million litres annually.
  • The beer wars in the country have remained focused on EABL and UK brewer SAB Miller.

East African Breweries Limited (EABL) has introduced a beer brand in the local market, taking the fight for mid-tier consumers to Keroche Breweries’ doorstep.

The regional brewer has unveiled its latest product dubbed Balozi, a malt-based, sugar-free brand, which is targeting Keroche’s flagship brand, Summit Lager, which has similar attributes.

EABL has in the past 18 months focused on growing and defending its high-end beer market against top rival SABMiller with both firms unveiling products like EABL’s Tusker Lite and Pilsner Ice as SABMiller did Castle Lite and Miller Genuine Draft.

The Balozi launch comes after Keroche announced a Sh2.5 billion expansion plan that will see it grow production capacity tenfold to 100 million litres annually which it hopes will help it to gain double-digit market share in two years.

“Last year, they (EABL) focused more on high-end brands to try and take on Heineken and Sierra but they have now turned to sugar-free beer,” said Eric Musau, an analyst at Standard Investment Bank (SIB).

“This is because Summit has been gaining traction in the market and the new capacity investments they have put in pose a real threat to them.”

The beer wars in the country have remained focused on EABL and UK brewer SAB Miller—which has made a return to the Kenyan market through subsidiary Crown Beverages — and  looking to cut EABL’s dominance.

The London-listed firm brews and imports its drinks from its Tanzania Breweries Limited (TBL) and they have announced plans to open a second brewing plant in Uganda at a cost of $80 million (Sh6.6 billion).

Dutch-based Heineken also established a regional office in Nairobi to market its flagship brand, Heineken in what stirred the market share war further.

With the middle and low end segments coming under pressure due to the restrictive alcohol law, the beer makers at the time trained their sights on the upper end of the market.

The Balozi launch now sees EABL shift its focus from these premium brands and low-cost brands such as Senator Keg — which is cheaply produced from sorghum — and towards the mid-tier brands where Summit and Summit Malt have growing presence.

“EABL management last month indicated that they will focus on innovation and creating different new brands and even mentioned getting into the traditional liquor segment,” Mr Musau added.

Last month EABL said they would also be investing Sh4.3 billion in expanding capacity at its Ruaraka-based plant as it seeks to increase efficiency.