EABL targets Senator market with Sh10 spirit

Charles Ireland, the EABL managing director. He says Jebel Gold will be packaged in a keg dispenser and will target Chang’aa drinkers and former Senator keg consumers, who have turned to other drinks after the tax  charge. Photo/FILE  NATION MEDIA GROUP

By Mugambi Mutegi

In Summary

• East African Breweries Limited (EABL) is set to introduce a Sh10 spirit into the Kenyan market to reduce losses brought by the dip in sales of Senator Keg
• The spirit dubbed Jebel Gold is being tested in 300 retail outlets across the country and will be sold at between Sh10 and 15 for a 30ml tot — measured using a special dispenser
• Charles Ireland, the EABL managing director, says Jebel Gold will be packaged in a keg dispenser and will target Chang’aa drinkers

East African Breweries Limited (EABL) is set to introduce a Sh10 spirit into the Kenyan market to reduce losses brought by the dip in sales of Senator Keg after the introduction of a tax on the low-end beer.

The spirit dubbed Jebel Gold is being tested in 300 retail outlets across the country and will be sold at between Sh10 and 15 for a 30ml tot — measured using a special dispenser.

Charles Ireland, the EABL managing director, says Jebel Gold will be packaged in a keg dispenser and will target Chang’aa drinkers and former Senator keg consumers, who have turned to other drinks after the tax  charge.

The tax charge of 50 per cent, which started on October 1, has seen the price of Senator keg, which is sold in 330ml containers, increase from Sh30 to between Sh42 and Sh50, a hike that EABL reckons has cut sales by 80 per cent.

“We have recently introduced Jebel Gold, a mainstream spirit, to target low-income consumers who currently drink illicit brews like Chang'aa, an informal distilled spirit,” Mr Ireland told an investor conference in London recently, adding that it complements Senator products.

“Jebel Gold keg is a direct response to that initiative. So, you can see that we are taking steps to try and insulate the business from any negative impact as a result of the excise tax onset.”

The low cost spirit is a remodel of the bottled Jebel brand, which EABL introduced to the market ten months at Sh100 for a 200ml bottle.

But the brewer has moved a step further to remove cost barriers on the brand by serving it from a keg and into glasses, hence side stepping expenses associated with bottling beers and transferring benefits to the consumers.

This will help the brewer compensate revenues losses from the expensive Senator Keg and capture consumers in the low-end market, who are price sensitive and have little disposable income to spend on alcoholic beverages, especially bottled beer.

“We will fight hard to protect that volume to the greatest extent that we possibly can and to introduce other initiatives to compensate for any shift by consumers as a result of the price increase,” said Mr Ireland. “Jebel Gold Keg is a direct response to that initiative.”

Senator Keg was launched by Kenya Breweries Limited with the support of the Government, in November 2004.

It is specifically targeted at the low-income consumer who has given positive indications of a need for a hygienic, affordable and bona-fide beer after a spate of fatalities from bootleg drinks.

In the year to June 2008, Senator had overtaken EABL’s jewel Tusker lager on the volumes front.

Tusker retained its position as the top contributor to the brewer’s revenue given the low pricing of Senator Keg, which made it to strike a chord with beer consumers in low income zones.

The pricing advantage was the product of innovation since it broke with brewing tradition by unveiling a beer made entirely from barley instead of a mix of barley and malt.