EABL’s biggest beer distributor signs deal with Keroche

Corporate News

Bia Tosha director Ann-Marrie Burugu. PHOTO | SALATON NJAU 

By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com

In Summary

• Bia Tosha, which handles about 12 per cent of EABL’s supplies, started distributing Keroche products last week after signing a three-month memorandum as negotiations on a long-term contract continue.

Beer maker EABL’s largest supplier, Bia Tosha, has signed a distributorship deal with rival Keroche Breweries amid an ongoing court row between the partners.

The East African Breweries Limited’s distributor, which handles about 12 per cent of EABL’s supplies, started distributing Keroche products last week after signing a three-month memorandum as negotiations on a long-term contract continue.

Bia Tosha sued EABL last month claiming that Diageo, its UK-based parent firm, threatened local distributors and coerced them into shunning rival manufactures.

Despite EABL’s objections, the High Court allowed Bia Tosha to continue supplying its products on 22 routes pending determination of the case.

“We signed a MoU with Keroche recently that will see us distribute their products for an initial period of three months,” Ann-Marrie Burugu, a Bia Tosha director, told the Business Daily in an interview.

“They (Keroche) are flexible in the long-term contract discussions and did not impose existing distributorship contracts on us.”

EABL, which controls around 90 per cent of Kenya’s alcohol market, has contracts with its distributors requiring them to notify the brewer if they decide to deal in competitors’ products or sell outside their assigned zones.

READ: Beer distributor accuses Diageo of threats in supply deal war with EABL

The brewer maintains that this contractual requirement is not anti-competitive. Bia Tosha, however, argues that the rule was an attempt at self-censorship where, out of fear of their contracts being terminated, businesses stuck to sole distributorship of EABL brands, as they did.

The deal with Keroche, which has about five per cent share of Kenya’s beer market, opens a new chapter in the distributor’s two-decade history.

“We are loading Keroche stocks onto our trucks and distributing them on the routes that we are already ferrying other products,” said Ms Burugu, adding that the company has a fleet of about 30 trucks.

Bia Tosha’s 22 routes cover Namanga, Bissil, Kajiado, Kitengela, Athi River, Industrial Area, South B, Nairobi West, Kenyatta and Lang’ata, according to court filings. Other areas are Rongai, Kiserian, Magadi, Upper Hill, Ngong Road, Hurlingham, Kawangware, Satellite, Dagoretti, UDV A, UDV B and UDV C.

Bia Tosha was also one of the distributors demanding that EABL increases commissions payable to suppliers from four per cent to between eight and 12 per cent of the recommended retail price.

This proposal, which EABL was not agreeable to, would have seen the retail prices of beer increase by about Sh20 per bottle.

EABL distributors earn a commission of Sh5.60 for the supply of a bottle of Tusker and Sh6.40 for Guinness but they wanted this adjusted upwards to as much as Sh16.8 for EABL’s flagship brand and Sh19.20 for the latter.