By Ian Ortega & Philippa Nantamu
78 years ago, two farmers and one brewer conceived an idea of starting the first brewery in Uganda. This brewery would come to be known as Uganda Breweries Limited (UBL) and would go on to produce Uganda’s first beer (Bell Lager) in 1950. The site that was chosen for this brewery was at Port Bell in Luzira, just next to Lake Victoria. It was the best location given that without an abundant supply of water, a brewery would be constrained.
Water defines some of the characteristics of beer, and you need a consistent source of this water. The average water usage in a brewery is in the ratio of 2.8 litres of water for every litre of beer. With Bell Lager as Uganda’s first beer, the brewery was in business. And Bell became Bell in the Ugandan story. There was a time whenever one asked for beer, they presumed it to be Bell.
In Comes Nile Breweries
But the team at Kakira Sugar Works was not resting. With Bell Lager dominating the Kampala side based at Luzira, a grand opportunity was presented in Jinja. There was need for a brewery based next to River Nile in Jinja. And that announced the birth of Nile Breweries Limited (NBL) and its first beer, Nile Special that was first brewed in 1954 coinciding with the completion of the Owen Falls Dam aka Nalubaale Dam. It would also mark the start of one of the fiercest competitions and rivalries in the Uganda business sector. The two companies UBL and NBL have gone on to compete for every bar, every space, and ultimately, every throat.
How UBL Lost Its Market Share
UBL suffered through the war, and from a mammoth of management changes. It went from being privately-owned to getting nationalized and back to the private sector. During this time as East African Breweries Limited (EABL) acquired more shares in UBL, several brands were transferred to Ruiki, Nairobi to be produced at the Kenya Breweries Limited (KBL) plant. Among these brands the famous Bell Lager. This would come back to bite UBL as this in a way changed the taste of Bell Lager according to the drinkers.
One loyal drinker of Bell Lager, Peter Kaba commented; “I knew something had changed about my beer. It wasn’t that same Bell Lager.” And perhaps there was truth to this. KBL’s water comes from an underground well, UBL’s water is from Lake Victoria, a freshwater lake. Water in every area will have different compositions especially of minerals.
Part of the reason for transferring the beer production to Nairobi was because the production machinery in Uganda was past its asset life. The war had meant that there were never spares to repair and maintain the plant and the technology had become redundant. Some of the machinery had also been looted. The plant would suffer from breakdowns. And the power supply was inconsistent. Management then found it fit to utilize some of the capacity at KBL.
But the supply chain from KBL was not reliable. During this time, there were stories of out of stocks. UBL kept running out of stock. And consumers are not loyal. They won’t wait for the product to be delivered, they would switch. That’s how many slowly switched to Nile Breweries and never looked back.
UBL’s Years of Decline Come to Light
There was also a data problem when it came to how UBL was measuring market share. For long, UBL had relied on the false assumption that it was still number one. It took some bold leadership to question these facts. It was simple, the MD and his team then went to the bars and realized the tables were saying something different. They were seeing more Nile and Club on the tables than UBL products. They knew something was wrong with the data. When the data was corrected, UBL’s market share was down around 35 percent and declining every day.
It was panic in the house. Many at that time predicted that it would be a matter of time before the business entity in Uganda would be sold. There were lots of issues to deal with. Capacity-related problems. Technology that had been overtaken by time; you had the products that had quality issues, and a sales and distribution team locked in the models of the past.
UBL’s Years of Struggle and Awakening
UBL also suffered from a lot of decision making that had been centralized at EABL group level. Almost every decision was being made at group level. For KBL for example, it helped with UBL not being able to produce most of its own brands. It would always help with KBL’s annual targets. The volumes that KBL exported to Uganda were a boost to the KBL numbers.
By this time, NBL had grown strong through its sales and distribution arm. NBL has always focused on great distribution. UBL has always been the best at marketing and branding. UBL focuses on getting the best products, but it’s not yet great at distribution. Distribution is the strength of NBL. NBL acquired this skill following its acquisition by SABMillers from South Africa. The South Africans are known for cutthroat distribution tactics. They will fight for every space, every inch. In those days, NBL would even incentivize bars not to stock UBL beers. You would find a Nile Special in the furthest point in Uganda but struggle to find a Bell Beer.
But Nile also anchored onto the Ugandan identity. Every person that visited Uganda got to learn about Nile, produced at the source the Nile River, then one only needed a Nile Special. And it also marketed itself as the beer of beers. You were strong if you could handle two Niles. For the men that are driven by egos, this became the beer of men. And for the ladies that wanted to feel like Baddies, it became their beer.
How UBL Started Rebuilding
UBL then went bold on restructuring. And this restructuring was not just on the people, it was also a refocus on the core. It involved outsourcing several activities. UBL just realized that it couldn’t do everything in-house. For example, the logistics could always be outsourced to a company such as DHL. In the past, UBL used to run its own fleet of trucks and vehicles, it had its own in-house mechanics. This model was no longer sustainable.
UBL would then sell off some of its land that housed staff quarters. Again, they had been running a model like that of the sugar estates. UBL had to drop this model. Focus on what you’re good at, and that’s putting beer in a bottle. You cannot be into trying to grow your own barley. You can support the farmers, but you can’t be directly into that. UBL even outsourced the sourcing of these raw materials such as barley.
The Salesforce was also restructured. Nothing was left untouched. With the organization structure re-assembled and recreated for success, it was now time to also renew its machinery. NBL had invested in new plants.
At this point, UBL brought in the famous Line 4, with a production capacity of around 50,000 bottles per hour. Before, UBL had been locked in a struggle with a Line 3 and Line 2. These lines kept producing defects, bottle bursts, name it all.
But the transition to this high technology line from Krones Germany was not easy. At around the same time, NBL also ordered a line from Krones Germany for its new plant in Mbarara. When UBL sent its technicians for training in Germany, NBL waited for them to complete training and scooped all of them. “You can imagine this scenario; a technician comes back from Germany and Nile Breweries offers to triple their salary,” one of the technicians remembers those days. The Human Resources Director at UBL at the time became bold and decided to increase the line-staff salaries to match up competition. It saved UBL’s moment.
UBL Builds a Culture of Winning
UBL then innovated around its culture. Previously, it was about coming to work, producing some beers and going back to business as usual. But around this time, you had Diageo (majority shareholder in EABL) introducing some systems to running the plant. These included things such as the Perfect Plant Management System (PPMS). In PPMS, there’s some order to running things. Staff never knew about maintenance work orders, about meetings. It was all haphazard working in the past. The same systems were being rolled out in the marketing and sales departments.
There was accountability. You had clear KPIs down to the person that cleaned the factory floor. Then came the disruptive innovations. UBL realized that it had the Spirits Section which comprised brands such as Uganda Waragi. For a long time, nothing had been done about Uganda Waragi. They extended this brand with the flavours. Imagine when Ugandans woke up to Uganda Waragi Coffee and Uganda Waragi Coconut, although Coffee failed, Coconut grew exponentially.
With better plant capacities, it was time to repatriate many brands back home. One of the breakthroughs was doing Guinness in Uganda. No body believed that Guinness would ever be made in Uganda. Then other brands such as Tusker Malt and Tusker Lite could now be brewed and packaged in Uganda.
UBL’s Way of Brand Building
UBL’s strengths has always lied in its brands. Yet this strength plays out as a weakness sometimes. In a way, sometimes they’re unable to focus and prioritize whereas Nile Breweries has only the beer segment to deal with. They tried to bring in Konange spirit, but it failed in this market.
UBL has both a strong spirits and beer segment. How do you play and focus with too much? How do you even segment and categorize them for appropriate consumer segments? Imagine having Bell Lager, Tusker Lager, TML, Tusker Lite, UG Waragi, Bond 7, Johnnie Walker, Smirnoff to mention but a few. The only thing missing in the UBL segment is a wine. But everything else, they have.
The Challenge with Bell Lager
Bell Lager is UBL’s flagship brand. It’s also the poster child of the product marginal utility curve from growth to maturity and possibly decline. UBL has insisted on marketing Bell Lager to younger audiences. It’s a brand that has desisted and hated being identified as an old beer. It wants to be young. Yet, this is the very problem of Bell. Bell for some reason always wanted to occupy the space that Club Beer used to occupy in the hearts of campusers because marketers believed when you “recruit” get new young customers, they will remain loyal to the brand as they grow older.
But this also means that Bell Lager over time has confused its identity and alienated its true supporters. The typical Bell Lager drinker is not the spontaneous, insecure, random campuser or young corporate. He or she is not a person that’s unsure about themselves but wholly bold and secure in who they are as a person. Yet, Bell keeps desiring to be this person.
For goodness’ sake, this is Uganda’s First Beer, no one should expect it to play as a young beer. Bell Lager should embrace this identity. What do you think goes on in the mind of that dude at Old Timers or Lido Beach when they watch Bell Lager’s adverts? They feel alienated. You take a beer that doesn’t want you as its target consumer. Bell Lager should be proud of this authenticity as Uganda’s First Beer and thus Uganda’s oldest beer. It should make old age a cool thing, something to look forward to. Now that we are in times where even the 30+ year olds are being dissed for being old, Bell Lager should speak to these people. That there’s a confidence in growing old, in having seen things, in the wisdom acquired over the years. It should be the beer that pats you on the back and welcomes you into the Middle Ages. A beer that says, look life will be okay. A beer that pats you on the back after that long commute and suffering through Kampala’s potholes.
Whereas Nile Special is known for the Nile River, Bell Lager is currently known for nothing. It even fears its ‘Ekidde’ name. It fears the heritage of even Port Bell. Bell should be the confident beer, the beer that’s not trying hard. It should be calm while all the rest panic.
The Future of UBL
The adult beverages industry is transforming at a rapid pace. In the past, marketers used to think about occasions. That depending on a specific occasion, one took a certain type of drink. For example, when it was fine dining, then people would take perhaps a wine. Then there was also thought of segmenting hangouts according to their types. But all these things no longer apply. People can drink from different categories in the same night. In the same night people will start off with beers, order for a bottle of whiskey and then close the night with shooters. There are nights they will just do a gin. It’s just unpredictable.
You also have the growing segments of the no-alcohol trends. Will UBL ignore this trend? Or will it produce for this trend? What about the tea and coffee infusions? With its Ready to Serve (RTS) plant, UBL should be looking around an entry in this direction. The market is still hungry for a proper quality Ugandan wine. Will UBL play here?
Of course, UBL will also have to prioritize and focus with less products. And while at it, it must build great listening capabilities, to be able to understand its consumers and the market. The biggest trouble today is that lots of organizations have become data-driven, but they have lost out on insight and intuition. What is that story that the numbers are not saying? If you go to an event sponsored by your brand, are people really falling in love with your brand or falling in love with the event? The Bell Oba Fest is a clear example of this. It’s by far one of Uganda’s awesome events now, yet this hasn’t drawn more people to Bell. Why are they afraid to run events for their true consumers, >35years? If all your brands in an organisation are speaking to the same consumer, how then would you expect that consumer to build loyalty to any one brand, when they themselves have a lot of maturing to do? And trends or influences they follow? How do you take into account all the unknown biases presented to this same consumer?
And UBL’s Innovation must borrow from NBL’s sales and distribution. You can have a great product but if you can’t distribute it, you don’t make mileage. Bell Citrus is another example. It’s hard to find, months after it was launched. Same goes for Uganda Waragi Lemon+Ginger. There must be a rethink around Distribution of Innovation products. It could be that the company will have to build a separate distribution arm akin to the Navy Seals concept. And this work cannot be left to an agency. It must be a skill that gets built internally. How do you distribute and cover foothold?
There’s a strength in being proud and braggy about yourself, being confident and in that way building a space whereby consumers will know exactly who you are as a brand or an organisation. Nile Breweries is proud and braggy and loud in being “True Reward From The Source” for Nile Special, “Uganda’s First Stout” for Nile Special Stout, all facts and nothing that can be taken away from them and in that way, they have been able to build a consumer base both in Uganda, and out of Uganda. Although marketing and branding is not NBL’s domain, they have been able to share consistent messaging about who they are and how proud to be Ugandan they are speaking to their consumers that has built a consistent buy-in for both young and old and piqued consistent interest of tourists coming into the country! Nile Special is the most requested for beer by tourists and locals, above 18 years in Uganda and that is a great story and win for a brand to have which presents a massive opportunity for UBL to know themselves and build loyalty like that, because for now, they absolutely do not have it for any of their beer brands even though they perceive to do.
With UBL back to top position, at over 50% market share, questions also arise. Will UBL maintain this position? NBL has been docile for quite some time, with most of the decisions being taken in Tanzania. What will happen when NBL awakens? Will UBL be in position to take on that once market leader?
Some Facts About Uganda Breweries Limited:
- EABL currently owns 98.2% stake in UBL and has offered to acquire 100% stake (2177995 ordinary shares) at UGX 5,630 per share.
- UBL contributes 18% of the EABL Volumes and 21% of the Net Sales
- The most outstanding local brands in UBL’s portfolio are Uganda Waragi, Bond 7, and Bell Lager
- UBL features among Uganda’s Top Ten Taxpayers