Nile Breweries
Golden Nile Brew Unparalleled in Quality
Supported by:
Multi-award-winning Nile Breweries, the home of Uganda’s Nile Special, is targeting significant growth over the next five years with more beer coming from its two breweries and new brands coming from its international portfolio. Country Director Adu Rando talks to Enterprise Africa about the major potential in Uganda.
Hongera (cheers or congratulations) to Nile Breweries, Uganda’s decorated brewing business, part of AB InBev, home of Nile Special and Eagle Lager and a host of other beers. Since 1951, the company has been quenching thirsty Ugandans, utilising the very best water as its base ingredient, tapped directly from the source of the River Nile in Jinja in the south of the country.
Alongside brewing excellence (Nile Special has won gold at the Monde Selection Awards in Belgium 23 years in a row) Nile Breweries is also driving sustainability and positive economic impact in the country. With a leading market share position and a strong relationship with government (paying more than 2% of total tax revenue in the country), the growth taps are open and Country Director Adu Rando sees a glass half full.
“Uganda is, in our view, one of the countries with the biggest opportunities for growth for a few reasons,” he says.
Adu Rando, Country Director
Rando has worked across the globe for AB InBev and was the first employee to move from the global conglomerate into Nile Breweries when AB InBev took a stake in Nile’s holding company SABMiller in 2016.
He says that the business has three obvious growth channels. First is general growth that occurs alongside a growing economy. 4.7% GDP growth in 2022 and 5.3% in 2023 is strong in a post-Covid environment that has flattened other regional economies.
“We see from experience we have in other markets that as the economy develops, there is a big boom in beer consumption.
“Since Covid-19 has been brought under control, we are seeing strong growth because the government is investing in its microeconomic policies. Things are stable and consistent, with manageable inflation. There is long-term thinking around infrastructure development and that boosts business and attracts investors. More recently, the deal with Tanzania for oil pipelines to travel across the country has been generating economic progress with many companies looking to get involved. These initiatives give us good confidence that the economy will continue to grow with strong and consistent fundamentals.”
He adds that beer, a non-essential item, is one which tends to be purchased when an economy is performing well and the public has disposable income. “It is the number one thing that people go for when they have spare money in the pocket and that makes it a super connected way to gauge how the economy is growing.”
Currently, Nile Breweries is on track for a strong year, suggesting positivity in the local economy.
As part of the AB InBev family, Nile Breweries can call on a strong international product portfolio when looking to fulfil needs in different market segments. At the top end of the market Nile Breweries delivers Stella Artois and Budweiser, and across the affordable range it has a range of high-quality products. But Rando believes there could be opportunities for other recognised brands to enter Uganda and this is another avenue for growth.
“There are significant portfolio opportunities,” he stresses. “There seems to be a trend with younger consumers who are seeking slightly sweeter but lower alcohol products and while we do have some products in the portfolio, we have alternatives in South Africa, including Flying Fish, that are not yet present in Uganda that we could potentially bring in.
“It’s likely that we will bring in the Corona brand,” he adds. “It’s not news that Corona is one of the three flagship global brands of ABInBev and there is guidance that these should be available in all markets globally. It’s in the works but we don’t know exactly when that will be launched as a high-end product.”
FORMALISING MARKETS
The third growth opening is more complicated and longer-term. One of the key underlying challenges for the beer industry in Uganda is illegal, informal, criminal alcohol distilling and brewing.
Rogue traders bring in tankers of risky ethanol, incorrectly documented to avoid detection, and add sugars or flavourings to make dangerous moonshines in unsanitary, hazardous conditions. No tax duty is collected and so the products are incredibly affordable. Bottled up in used plastic jerry cans or containers, this form of informal waragi is addictive and high in alcohol content.
If this black market, underground economy can be formalised or disrupted, and just a small percentage of participants moved to the professional, formal alcohol market, the starting point for consumers is beer, where Nile Breweries leads the way.
“The formal alcohol sector is only estimated to be 35% of all alcoholic beverage consumption,” says Rando. “There’s a lot of homework to be done by policymakers in the country, and the big stakeholders including the government to tackle this problem.
“We are helping to put together a task force to assist them with best practices from modern countries where there has been an improvement in regulation and the fight against illicit or counterfeit alcoholic beverages. It’s a win-win-win situation as by removing illicit players from the market, you generate more revenue for the government through taxation and you migrate consumption into the safer formal sector, especially beer. We are certainly not looking to close down a local village mother cooking home brew banana wine.
“We are dominant in the affordable beer market and we are already getting positive comments from the government around regulation. There is a new bill being pushed which will allow police to seize counterfeit, plastic bottle alcohol.”
Alcohol remains a strong part of the Ugandan culture, but unlicensed, unsanitary brewing continues to blight communities and Nile Breweries recognises the need to offer affordable products that can help encourage people to choose beer over unsafe alternatives.
“Our Eagle products – lager, extra and dark – are excellent as entry level products in the market,” reminds Rando.
In September, Nile Breweries began a campaign dedicated to education around responsible drinking. ‘Enjoy Like a Boss, Be a Champion of Moderation’ is the strap line for the project, hoping to sensitise the public on dangers of drinking too much and the associated health issues. Rando was onsite in Mbarara to help launch the campaign which will run until December.
Taking market share from the informal space is dependent on economic growth which will allow the public more Shillings to spend on beer.
YEAR-ON-YEAR GROWTH
Combining economic growth with portfolio opportunities and retrieval of informal market share will take Nile Breweries on a strong growth path that Rando hopes could yield significant growth statistics.
“We believe and expect that we can achieve double digit sales year-on-year over the next five years. Growing by more than 10% y-o-y over the next five years is going to be a massive growth engine for Africa, and we are doing it this year, in year one.”
An important engine in this growth is the company’s BEES app. An ecommerce and SaaS product designed by AB InBev to improve sales performance and digital reach, the app is used across 24 countries with five million users. Launched in Uganda in 2022 to bring efficiency in trade sales, BEES was quickly adopted, growing to achieve 90% of sales digitally after just five months. “Today more than 95% of ours sales flow through the app, with more than 80% of our customer base making purchases on a monthly basis,” says Rando. BEES allows the company to learn more about its customers and trends in the market, providing convenience, transparency, tailor made promotions, new services with other digital partners.
Encouragingly, all this growth and innovation comes in the first full fiscal year for the business since the lockdowns of Covid-19. Uganda did not ban the sale of alcohol but it did prohibit bars from opening. This was only lifted in full in February 2022. Since then, the company has seen nothing but growth and plans to capitalise at its brewery sties.
“For 2025 we will need to add things,” admits Rando. “There is physical space at both sites but Mbarara has the biggest space and we only have one line so expansion there makes sense.” But planning is bitter-sweet as the excitement around growth comes with concern about water quantity – a focus area for AB InBev globally.
The Mbarara brewery draws from the River Rwizi which flows from west to east, emptying into Lake Victoria. As part of AB InBev’s global strategy around water stewardship, various initiative are underway to improve quality and supply in Mbarara with the company aiming for 100% of communities in high stress areas where it operates to have measurably improved water availability and quality by 2025.
At Jinja, where the White Nile emerges before pouring 4200 miles across Africa to the Mediterranean Sea, Nile Breweries is a driving force in the community.
“Jinja has the capacity for expansion and likely in 2025 or 2026, we will see another line to support our growth,” Rando reveals. “That creates more jobs, and increases the amount of opportunities we deliver in terms of buying more from farmers and packaging companies etc. We are keen on developing locally as much as we can and we are one of the most successful companies in AB InBev when it comes to doing that.”
He adds that the company went from 70% locally sourced materials five years ago to almost 100% today. “Our impact on the local economy is massive.”
LOCAL, RELEVANT
Local impact and Ugandan involvement has been at the heart of Nile Breweries since its establishment. The solid infrastructure built by the founders, supporting native jobs and sustainability, was part of the reason the government took a stake in the business before selling to SAB in 2002. Now, the Jinja facility produces 1.8 million hectolitres annually and Mbarara adds more than 650,000 hectolitres each year. To achieve this vast production a widespread value chain is engaged.
“It’s a massive effort,” smiles Rando. “I am very impressed with the level of effort around the things that need to be done to secure this. For example, everything needs to be planned two years in advance. To properly cater for the amount of barely we need to grow means we need to plan the amount of seeds we need to bring in. The proper quality seeds for the type of barley that makes quality beer is not available anywhere – it’s a big investment to certify those seeds. There are tonnes of seeds that must be sourced and then distributed to farmers and the logistics planning is large.”
Uganda’s agricultural landscape is fragmented and characterised by challenging terrain. Rando says that his team recently acquired a fleet of offroad motorcycles, reminiscent of competition dirt bikes, so that agents could reach small rural farms faster.
“In the last five years, we have helped directly train, digitally include, and financially empower around 25,000 farmers. Every year, we visit and train around 10,000 farmers ourselves. It takes a robust structure to deliver this.
“If we fail to produce the barley that we need to support our brews and we have to import, that is a double hit for us as it costs more and we lose tax benefits that you gain for local production.”
AB InBev has invested heavily in Uganda over the past decade to ensure localisation of production. A $20 million maltings facility was complemented by a $6 million technology investment into a barley humidity machine that keeps the product in perfect conditions in the silo to extract more malt and, ultimately, more flavour while reducing waste at the same time. Both investments created significant jobs and local opportunities.
For Rando, living and working in a country with one of the highest per capita alcohol consumption stats in Africa, the potential bubbling up brings crisp excitement.
“I visited Uganda before I moved for the job,” he remembers. “It always was the country that gave me the best feeling. Ugandans are hardworking, ambitious, proactive, engaged, and looking for new opportunities with digital solutions. There is a young, resilient population, with good education, and a consistent government regime and that brings long-term thinking around the economy – the growth potential here is undeniable.”
He highlights historic recognitions of the brand alongside modern, international quality standards as the perfect recipe for a tasty business.
“People light up every time we talk about Nile Special here in Uganda. We brew, pulling water from the source of the Nile, and the way the brewing process has evolved in recent decades has made the quality standard for Nile Special world class. Quality is measured at every stage in the brewing process and with every input, and Nile Special was ranked top for quality across all of our beers in the whole of Africa across 12 countries that we operate in.”
Growth of Nile Breweries would not be possible without the support of Ugandans and the long value chain that brings the beer portfolio to life. Rando is ambitious and raises a glass to a fruitful future in the Pearl of Africa.
“As a brand, Nile Breweries is the pride of the country. It is iconic and the quality is unparalleled,” he concludes.