SABMiller under its branch Nile Breweries Limited (NBL) has embarked on a massive expansionist plan to takeover Uganda Breweries Limited (UBL) from East Africa Breweries Limited (EABL) and The Diageo Company, this is yet another exclusive. And quite amazingly parent company Diageo has told NBL that they are selling UBL if a right price comes up. This comes at a time when UBL’s market share in Uganda is on the wane with the company enjoying less that 30% of the market-share while NBL enjoys over 65%. However EABL and Diageo are only willing to sale their beer brands and not spirits. Their beers include; Guinness, Tusker Malt, Tusker Lager, Mr. President, Bell, Pilsner Smirnoff Ice (Red and Black) and Senator. And Xclusive UG can confirm that preliminary talks between the rival
companies have already taken place though Diageo overpriced NBL.
However a source in NBL sounded totally confident as he told Xclusive UG that NBL will take over UBL in two years’ time. This rather interesting news comes at a time when UBL’s total revenue and contribution to EABL is expected to take a massive dip with EABL’s Tanzania branch expected to rule the East Africa region. The growth of Tanzania’s contribution to EastAfrican Breweries Limited’s total revenue is expected to outpace Kenya and Uganda in the next three years, research analy-sts at Kestrel Capital projected recently. In an investors’ note released Wednesday, Kestrel Capital projected that EABL’s Tanzania operations will expand at a 15.1 per cent compounded annual growth rate (CAGR) in the next three years.
Over the same period, the CAGR for the Ugandan and Kenyan operations is projected to be 9.4 per cent and 10.9 per cent respectively. The Kenyan operation is however still expected to maintain its position as EABL’s biggest business, accounting for more than two-thirds of total revenue. “We expect to see Tanzania sales grow at 17.2 per cent year-on-year in 2014 and 2015 driven by improving volume growth and additional market share,” says the Kestrel Capital report. The Tanzanian operation is also expected to yield higher profit margins for EABL in this period helped by use of locally produced raw materials and manufacture of premium brands of the brewer in the country. EABL income statements show that contribution of the Tanzanian operation in the combined profits from operations was in the negative at -4.9 per cent and -2.2 per cent in 2011 and 2012 financial years respectively. However this certainly means that the Uganda market is on the wane despite the fact that Ugandans are number one alcohol consumers in Africa.