By Julius Barigaba
In Summary
- It is still too early to gauge the market’s reaction to last week’s appointment of Mark Ocitti as the new managing director at Uganda Breweries Ltd. The company is desperate to close the huge gap in its market share.
- Uganda Breweries is a subsidiary of East African Breweries Ltd, whose majority shareholder is global premium drinks firm Diageo. Its rival Nile Breweries enjoys a 63 per cent market share for bottled beer.
It is still too early to gauge the market’s reaction to last
week’s appointment of Mark Ocitti as the new managing director at
Uganda Breweries Ltd. The company is desperate to close the huge gap in
its market share.
The change of leadership was announced by Uganda Breweries board
chairman Alan Shonubi. Mr Ocitti will take over from Nyimpini Mabunda,
whose three-year contract expires at the end of July.
Mr Ocitti is tasked with clawing back beer market share from
SABMiller subsidiary’s Nile Breweries Ltd and also grow the company’s
strong spirits portfolio.
Uganda Breweries is a subsidiary of East African Breweries Ltd,
whose majority shareholder is global premium drinks firm Diageo. Its
rival Nile Breweries enjoys a 63 per cent market share for bottled beer.
“At Uganda Breweries, we have always believed in selling beer
well, and selling the spirits even better,” said outgoing MD Mr Shonubi,
under whose tenure marketing events were dominated by spirits and
Uganda Waragi.
Mr Ocitti said with the company’s assortment of beers, gins and
spirits, UBL has “the biggest alcohol portfolio in the country,” which
will enable us to dominate the market.
Volume driven
But, a 2014 research note by Deutsche Bank shows beer is a
volume driven business, and in situations where companies have attempted
to find growth by marketing both beer and spirits, the beer business
has suffered.
“The total beverage alcohol company was much touted a decade
ago, but has proven a failure. With premium spirits being high value,
low volume items, the production, distribution and sales dynamics are
diametrically opposed to a successful beer business. Whenever there have
been combinations, beer loses. This is most apparent in Africa,” says
Deutsche Bank.
The brewer relaunched leading beer Bell Lager, it introduced
Senator Stout and launched a new product Ngule Lager. Mr Shonubi said
these brands saw Uganda Breweries’s innovation net sales quadrupling to
eight per cent by end of the last financial year.
Uganda Breweries executives say Mr Ocitti comes with strong
credentials that could change the fortunes of the brewer’s brands,
having worked as the managing director of EABL International since 2014.
EABL International (EABLi) oversees the company’s brands in Rwanda,
South Sudan and Democratic Republic of Congo.
Within his first year as MD of EABLi operations, Mr Ocitti
doubled its contribution to the EABL group from around five per cent to
over 10 per cent.
But industry analysts argue despite Mr Ocitti’s credentials, he
now faces peers with stronger credentials. Moreover, stability at
management level in the beverage business is critical to execute the
company’s strategy and grow its market share.
“In the past 10 years, Nile Breweries has had only two managing
directors. The same cannot be said of UBL,” an industry source says,
citing the many UBL bosses that have come and gone.
In 2015, Deutsche Bank’s research shows that a brewer should
focus on increasing volume, which requires speed and depth from
production to distribution.
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