E-Malt.com News article: Kenya: SABMiller’s launch of a fifth brand in Kenya taking competition with EABL to new heights

SABMiller is set to launch its fifth beer brand in the Kenyan market this week, taking its war with East African Breweries Limited (EABL) for the control of the premium market to new heights, Business Daily Africa reported on February, 21.

The Castle Lite brand targets the lucrative premium beer market that has in recent months been gripped by a vicious market share war pitting SAB Miller, EABL and Heineken.

SABMiller — which has made a return to the Kenyan market through subsidiary Crown Beverages — is looking to cut EABL’s dominance. It launched its third beer dubbed Miller Genuine Draft in December.

Its rival EABL has also moved to protect its turf by introducing Tusker Lite, Pilsner Ice and Windhoek while Heineken has established a regional office in Nairobi to market its flagship brand, Heineken. “These beer wars were bound to resurface after the two firms ended their distribution partnership leaving SABMiller with the task of trying to claw back market share,” said Gregory Waweru, an analyst at Kestrel Capital.

SABMiller Kenyan subsidiary Castle Brewing shut down in 2002, forcing them to enter an uneasy distribution agreement with EABL after the SABMiller predecessor bought 20 per cent stake in EABL in a share swap. The deal was terminated last year after EABL opted out.

It is now distributing its four brands, including Peroni, Redds and Castle Lager from Tanzania Breweries Limited through Crown Beverages — which it bought late last year after taking control of family-owned Crown Foods, the bottlers of Keringet drinking water.

The addition of a fourth brand to its stable signals the firm’s eagerness to gain a foothold in Kenya months after it officially ended a distribution agreement with EABL.

Its increased activity in the local market after the recent re-launch of its Redds brand is expected to spark off intensified rivalry with EABL with their focus being the premium market where local outfit Ozbecco — which sells Sierra beer — is also competing for this space.

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 18.31 per cent, has not made matters any better.

“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,” said Eric Musau, an analyst at Standard Investment Bank (SIB).

The global brewing giants are seeking a stronger foothold in emerging countries where beers sales are still rising compared to Europe and the US. This has seen East Africa becoming a battle zone between SABMiller and Diageo led EABL.


22 February, 2012