UBL vs. Nile breweries: A battle for the low-end segment

Research reveals that more than half of all Uganda’s beer market is commanded by the low-end segment. Beer is a pastime for the low-end market segment, who consume in volumes that are needed to make profits.

These are the kind of people who drink the whole day. And that is why they are a center of competitive rivalry by the breweries. Who will take the day?

Uganda Breweries Limited (UBL) was not so long ago, the leading brewer of alcoholic beverages in Uganda. Its growth was so exponential that it caught the eye of East African Breweries Limited, who then acquired it in a friendly takeover. That growth has since changed following more robust competitive strategies adopted by its major competitors. The company has experienced steady decrease in their market share.

In response, several changes have taken place at Uganda Breweries Limited (UBL) in the recent past as the company struggles to regain the lost glories. Not so long ago in 2014, UBL (a subsidiary of Diageo) sacked the entire commercial department comprising of sales, marketing, distribution and trade. About 70 employees where affected. The company reportedly asked those who wished to retain their jobs to reapply. More changes have since been taken place in all areas of human resource, marketing and distribution, branding and product innovations. These changes were intended to align the structure and systems to the strategy, as well as eliminate none core tasks and personnel.

Strategic moves

In the latest changes, UBL launched a new pocket size bottle for Senator Stout. This was done in May 2014. The 330ml bottle is selling at Ugx 1,500 and now available in supermarkets. Last year, Nile Breweries, arguably UBL’s biggest competitor announced a price reduction for their Eagle beer after it noticed it was wrongly priced. “When we keep our brands affordable, beer volumes grow,” said NBL Managing Director Greg Metcalf after announcement of reduction in price.

UBL’s Senator was reportedly riding on this to get market share.

Analysts say, the new packaging aims to fight off Nile Breweries Eagle beer which commands the beer market in Uganda and accounts for 60% of Nile Breweries revenue. The new packaging also seeks to attract the low end consumers who command the beer industry in Uganda. It’s no wonder Nile breweries introduced Chibuku, priced at Ugx. 1,000 for western Uganda, a region that used to consume local brew.

Unveiling the company’s half year results last year, EABL Group Director Charles Ireland noted: “I am very pleased with our performance in Uganda that yielded a net sales growth of 13%. Our price mix interventions and effective launch of Reserve brands played a key part in securing this positive result, along with a successful new Bell Lager campaign and a very strong performance on Uganda Waragi.”

Research reveal that more than half of all Uganda’s beer market is commanded by the low-end segment. Beer is a pastime for the low-end market segment, who consume in volumes that are needed to make profits. These are the kind of people who drink the whole day and are the majority.

In the other changes, UBL appointed Golden marketing to boost distribution particularly merchandising in this hyper market. Distribution has been a key issue for the once giant beer company. After July 11th 2010 bombing at Kyadondo rugby grounds, and continued security threats more Ugandans now prefer to buy beers from Supermarkets and drink from home.

UBL also unveiled new look for Tusker Lite. The new look comes alongside a new campaign ‘‘Lite the Way’’ aimed at exemplifying the pioneering and evolving lifestyle of ‘‘optimistic, inspiring, young, vibrant and ambitious consumers.’’ Speaking at the launch recently, the UBL Marketing and Innovations Director said: “Tusker Lite is a refreshing low carb beer that delivers an easy drinking experience, a perfect companion for optimistic cool consumers who want a beer that will not slow them down as they party and work hard. It is a beer that lets you remain stylish and in control as you carve your own path in life’.’

Leadership changes at UBL

Sara Banura: Among the new recruits is Sara Banura Kitakule as Divisional Sales Manager for North and Eastern Uganda. Banura joined UBL as key accounts manager two years ago from Coca Cola where she worked for close to seven years. She holds a bachelors degree in development economics and currently pursuing a Master’s degree in Business Administration at University of Edinburgh United Kingdom.

Juliana Kagwa: Formerly, Country manager, of struggling Heineken Uganda, Juliana finally returned home (UBL) where she had worked as assistant marketing manager between September 2010 and June 2012. She returns to UBL as marketing Director in charge of spirits. It remains to be seen if she will have an impact.

Heineken has had a rough time since brand was launched in Uganda. After struggling with the market, last year, in an attempt to attract more consumers for struggling brand, Heineken had to slash prices. As such, the 330ml bottle that used to sell at Ugx 5,000 was reduced to Ugx. 3,000 while 500ml bottle formerly selling at Ugx 7,000 was reduced to Ugx 5,000. The reduction, according to market intelligence, came as result of sluggish sales and some retail shops were threatening to resist stocking the beer. Market intelligence reports indicate the changes have not made much impact. There has not been any significant change in sales. It’s no wonder when the tax man-Uganda Revenue Authority was looking for corporate accounts to pay Income taxes in advance; UBL was not on the list. On the other hand, Nile Breweries made it to the list. Will they or will they not? Time will tell. Sorry, the changes in the market share will tell.

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