Duncan Miriri Nairobi

East African Breweries was investing in a beer canning line to tap a growing market of consumers who drink at home after Kenya introduced tough new restrictions on the sale of alcohol in bars, its chief executive said yesterday.

Nearly a year ago, Nairobi passed the alcohol control act, which has cut operating hours for bars and nightspots, curbed the previously unrestricted sale of alcohol in outlets such as supermarkets and imposed heavy fines for offenders.

Consumers responded by starting to purchase alcohol for use at home to beat the restrictions, which many analysts expected to hurt sales for East African Breweries, the biggest brewer in the region by market value.

“What we have discovered is the growth in traffic into supermarkets by people wanting to buy and take their drinks home, so we are introducing cans effective next year in March,” chief executive Seni Adetu said.

Although the brewer already sells selected brands in cans, they are only available in 340ml quantities, whereas bottles are sold in 500ml sizes.

Adetu said that all brands would be produced in cans of 500ml, without disclosing the amount that would be invested in the packaging line.

East African Breweries, which is controlled by Diageo, sells spirits like Johnnie Walker whisky and leads in the beer market with brands such as Tusker and Pilsner.

The brewer took a loan from Diageo to purchase back a 20 percent stake in its subsidiary Kenya Breweries from Diageo’s rival SABMiller, following its decision last year to terminate a partnership with SABMiller in Tanzania.

During that complex manoeuvre designed to give it a larger share of the fast-growing neighbouring market, East African Breweries bought a controlling stake in a small Tanzanian brewer called Serengeti and offered its 20 percent stake in SABMiller’s Tanzania Breweries to the public.

Adetu said that the buyback of the shares in Kenya Breweries had been completed, without stating the value of the deal that some analysts had been expecting to be funded through a cash call.

The company also operates in Uganda and exports products to Rwanda, Burundi and South Sudan. It expected those markets to grow faster than Kenya, Adetu said.

East African Breweries planned to increase sales of spirits in the region, Adetu said, adding that spirits offered better margins than beer.

Sales of spirits in Kenya grew during the firm’s financial year ended last June, thanks to consumption by upper and middle income segments. It wants to drive sales in its other markets too.

Adetu said that rising competition in Kenya from smaller brewers and imports of beers like Heineken did not pose a huge challenge. – Reuters