Unlike our past reports and analyses, we are pursuing a quite different approach to this one. We have chosen to answer the most critical questions that should be answered by this industry. Thus, consider this report as a journey into each of those questions:
- What is the current state of the alcohol industry? Who are the key players? What is their market share?
Beer is growing at a CAGR of 6.5% for F25 to F30 while Spirits is growing at 15.4% for the same projected period. However, spirits are growing off a smaller base, and growth is mainly in the value segment.
Capacity-wise (Beer), NBL has double UBL’s capacity. NBL has an annual production capacity of 3.1 million hectolitres with two plant sites at Jinja and Mbarara. UBL on the other-hand boasts of 1.6 million hectolitres.
- Uganda Breweries Limited under East African Breweries Limited
- Nile Breweries Limited under ABInbev
- Foreign Players (Heineken, Royal Swinkels, etc)
- Heavily skewed to beer
- What is the Uganda Beer Market Like?
The main players in the Uganda Beer market are Uganda Breweries Limited, owned by East Africa Breweries Limited (EABL), Nile Breweries Limited (NBL) owned by ABInbev and Heineken. UBL owns about 58% market value share of the beer market while NBL takes up about 42.1% and the rest is shared among Heineken and other foreign players. There’s also the emergence of the craft segment such as Banange Beer although they are yet to command sizable volumes and have limited capacity and distribution.
The Uganda beer market is divided into four major categories: At the bottom of the pyramid is the Value/Emerging beer at 17.6% share, Mainstream Beer at 48.5%, Premium Beer at 28.5% and the Ready to Serve/Ready to Drink at 5.4%.
The Value/Emerging category is dominated by Nile Breweries Limited (NBL)/AbInbev with 86.2% share. NBL also dominates the Mainstream category with 53.3% share. Uganda Breweries Limited (UBL)/EABL/Diageo dominates the Premium category with 94.1% share and the RTD/RTS segment with 99.3% share. Important to also note that UBL was a fast-mover in the RTD segment with a fully-fledged first of its kind, RTD plant in Uganda.
The Brands are as below by the different categories
| Category | UBL | NBL | Others | |
| Value Beer | Ngule, Senator | Eagle | Local Brew | |
| Mainstream | Bell, Pilsner, Tusker Lager | Nile Special, Club | ||
| Premium | Guinness, Tusker Lite, Tusker Malt, Tusker Cider, White Cap | Budweiser | Heineken, Hunters, Desperado, Savannah | |
| RTD/RTS | Smirnoff Red, Smirnoff Black | |||
| Craft | Banange |
- What is the Uganda Spirits Market Like?
The main players in this segment are Uganda Breweries Limited (UBL) through its subsidiary, International Distillers Uganda (IDU), Kakira Distillery, Ambiance, Pernod Ricard and Distell.
The Spirits segment is divided into three major segments of Value spirits, Mainstream spirits and Premium Spirits. Value spirits comprise 28.8% of the market, Mainstream comprises 63.4% while Premium spirits is at 7.8%. It would be prudent to talk of the Reserve category, however this is swallowed within the Premium category. None of the major players is in the Value category as it’s considered a red ocean, a bloodbath with several local players.
In the Mainstream category, UBL has a market share of about 87% while Ambiance and Kakira share the rest. In the Premium Category, UBL has a market share of 62.1% versus the rest by Pernod Ricard and Distell. The player to watch in the spirits category is Kakira. One, they have the advantage of producing the neutral spirit. They supply neutral spirit to UBL and are now manufacturing their own gin and rum. They also have the advantage of producing their own sugar. Thus, they have the cost-leadership advantage.
| Category | UBL | Distell | Pernod Ricard | Others |
| Value | ||||
| Mainstream | UG Waragi, Bond-7 | Kakira Gin, Kakira Rum | ||
| Premium | JW Walker, Don Julio, Baileys, Ciroc | |||
| Reserve |
- What are the macroeconomic drivers of this industry? What should be watched?
- GDP Growth rate: Uganda’s projected GDP growth rate by the IMF is 7.5% for 2025. However, it’s important to scrutinize the sectors that are contributing to this growth.
- Inflation rate: Inflation has eased at 3.6% as of January 2025, however Uganda still suffers from the post-Covid-19 inflationary effects which has affected expansion in the premium categories of both beer and spirits. Earnings growth in Uganda has not matched the inflation rate thus reducing discretionary spend and alcohol’s share of wallet. Further interruptions to global trade, catastrophic weather occurrences that could raise food costs, higher import prices, and increasing domestic demand are all expected to drive up inflation in 2025.
- Exchange rates: The Uganda Shilling continues to periodically fluctuate against the U.S. dollar and other foreign currencies.
- Interest Rates: Interest rate in Uganda is trending around 13.4%
- What are the major cost-drivers in this industry?
- Liquid & Packaging costs: Liquid includes, Cost of neutral spirit, cost of barley and malt, cost of enzymes, flavors, sweeteners. Packaging costs includes, cost of glass and plastic, closures, labels, cases/crates
- Conversion and Equalization Costs: Labor, Utilities (energy, and water), depreciation and maintenance.
- Advertising and Promotion Costs
- Logistics and Distribution Costs
- Taxation (Excise Duty & Corporate Tax): Digital tax stamps impact
- What are the current opportunities/threats in this industry? Key watch outs?
- The LPA-entrant opportunity: One million Ugandans enter LPA+ every year
- Rapid Urbanization: More Ugandans continue to migrate to cities.
- Syndicated fraud; end to end leaks
- Costs
- The Young Increasingly-Sober
- Reducing/Fluctuating Disposable Incomes
- Artificial Intelligence
- Illicit Threat
- Parallel and Counterfeit Threat: One of the bar folklore in Uganda is the ’fake alcohol’, and this is coming from the fact that in a number of hangouts, fake alcohol is trading alongside genuine alcohol. It’s possible to start off with a genuine bottle only to be given a fake bottle on the next round of drinks. How are the players addressing this threat as it also directly dilutes their margins but also affects consumer perceptions around alcohol. How will the alcohol manufacturers set in place the right incentives for outlets not to profiteer at the risk of consumer safety? Fake alcohol has become a category of its own, it continues to grow, more continue to catch on, and there ought to be a concerted effort against fake alcohol, something akin to a joint industry effort. But it will require buy-in.
- The Retail Opportunity
- The SLOB Opportunity: All breweries deal with a sizable volume of Slow and Obsolete finished product inventory. As people seek more affordable yet high quality products, these SLOBs could provide the right entry points. Breweries could partner directly with Liquor stores to acquire these products thus providing revenue points.
- What are the management wheels in this industry?
- Talent Management: We love to phrase this differently as ‘culture management’. The ultimate differentiator in this industry is going to boil down to who gets better at building a culture of excellence and innovation, and managing talent within this culture.
- Brand Management
- Supplier Management (Agencies, Contractor firms, Logistics firms)
- Distributor Management
- Cost Management
- Glass Management: The industry is still heavily skewed towards glass, both returnable and non-returnable glass. For returnable glass, it’s meant to do about 25 to 30 cycles or have an asset life of 5 years. However, this is not the case and thus, glass remains a major capital expenditure for these manufacturing firms accounting for 10 to 30% of annual capex investments.
- Capacity Management: The major players have heavily invested in capacity. Nile Breweries currently runs two plants, one at Jinja and another at Luzira. Uganda Breweries runs two plants both at Luzira, with one dedicated to spirits and another to beer. With this capacity, the next question is effective and efficient utilization of the capacity.
- Innovation Management
- Data and Insights Management
- Sustainability Management
- Mergers and Acquisitions: It’s important to note the current shift in direction by Diageo, the owners of UBL. Diageo is divesting from the beer market in Africa having already sold off its Ghana, Cameroon, Ethiopia, Nigeria and Seychelles beer business. That means, Diageo’s current footprint in the beer market is currently in East Africa.
Two key moves ought to be interpreted here. First, Diageo increased its stake in EABL from 50.03% to 65%. Thereafter, EABL attempted a full buyout of all the minority stakeholders in UBL. Insider reports have also reported that Mckinsey, a top management consulting firm has positioned in Nairobi, and EABL could be one of the projects in their dockets.
That means, there’s a high chance that in the next 2 to 3 years, Diageo will have finalized a sell-out of the East African beer segment. So far, Heineken is currently in the lead of potential acquisition of the East African beer segment. Diageo would seek to maintain a lean spirits-focused segment as it sees more future in the spirits premiurization, driven largely by the high margins on spirits. Other firms such as Phoenix Beverages and the Castel Groups have also been placed in the picture of the potential acquisition. According to Insider Sources, Diageo will have to make the hardest decision concerning EABL, as a complete sell-out will imply that Diageo has also removed its manufacturing footprint from the entire African market.
- Who is the Future Consumer in Uganda?
The future consumer in Uganda is transient, shifts between occasions and categories, goes into moments of moderation, is constantly searching for novel experiences, doesn’t settle, is not loyal to brands, is constantly asking; ‘what’s in it for me?’ Is more informed, wants to know what their brand is doing beyond just selling them beer or spirit. Is this brand pioneering a cause? Is this brand playing an active part in society? Who is influencing this brand? What are their values?
This consumer is hanging out ‘Beyond the 3rd space’. We see the emergence of the Nth spaces (something we earlier hinted on here). The future consumer is fluid, hates to be placed in boxes, doesn’t want to be defined by the brand, but rather wants to define the brand. So whereas a brand may claim to be premium, the future consumer may not define it as so, they are using totally different categories and identity placements. It’s a challenge, manufacturers will have to keep the categories to themselves, the consumer is not thinking so much in terms of categories any more. The consumer will savour a Bond-7 not because they identify it as mainstream, but because it’s also playing a nostalgic moment. There’s an air of nostalgia that’s sweeping through the consciousness of the future consumer. People speak of their ‘Bondo’ campus experience, and will seek to recreate such moments.
We are witnessing the rise of the dynamic self-assured consumer. These consumers already imagine themselves as micro-celebrities. In the past, brands had consumers as fans, now, consumers imagine that brands are their fans, so they must peddle to each of their peculiarities. Why? Thousands of consumers today receive more social media publicity than their brands, they have the likes, the retweets and the views on their profiles, they’ve built a bubble where they engage as micro-celebrities. And they expect their brands to approach them in this style.
The New Clubs / New Highs
One of the watch-outs for the alcohol industry is the continuous drift and search for new highs. Some young people are completely opting out of alcohol, with many preferring sobriety as the new high in Uganda. There are those that dread the next-day hangovers and thus find more comfort in the mocktails, coffees and teas.
The consumption spaces are also closing out. Many young people talk of the disrespect in clubs and top lounges where the bouncers and the waitresses choose to implement a class system, with big spenders getting more care than the average spender. Other young people are choosing gym as the new club. “I would rather be in a gym, hitting my treadmill steps than go and be disrespected at a lounge, with poor service and inflated prices,” a young person confides. Thus to this segment, gym is the new club.
The question to ask: what will happen as this trend grows? The trend of those who seek to enjoy life without going through the struggle of drinking alcohol, getting drunk and suffering a hangover the next day? It’s the growing trend of neat enjoyment, or soft enjoyment.