Kenya Breweries Limited Managing Director Jane Karuku speaks during the
unveiling of Tusker Premium Cider at Steak Out restaurant, Lavington, on
October 13, 2016. PHOTO | FILE | NATION MEDIA GROUP
In this interactive series, we invite readers to send in
questions to selected public figures. This week, Kenya Breweries
Managing Director Jane Karuku responds to your questions.
1.
To sustain your multibillion shilling Kisumu factory, you intend to
contract sorghum farmers for the raw materials. How have you planned to
insulate this model against abuse by your managers or brokers linking
you with the farmers as witnessed in the sugar industry, where farmers
receive negative returns after dubious deductions being done by the
companies?
Komen Moris, Eldoret
To begin with we have already contracted over 15,000 farmers from western Kenya for the Kisumu brewery.
This
means we now have over 45,000 sorghum farmers across Kenya, who will
deliver the crop to our breweries in Nairobi and Kisumu for use in
production of our iconic Senator beer.
This model has
been hugely successful since we started its production in 2009. In the
year ending July 2018, farmers delivered 31,000 tonnes of sorghum worth
Sh1 billion, and the commercialisation of this activity has resulted in a
huge socio-economic transformation.
There is a huge potential for the growth of Senator, as illicit
alcohol consumers seek safer, quality drink options, so our demand for
sorghum as a raw material for Senator will potentially remain high.
The
current tax regime is encouraging, given the sensitivity of this
lowly-priced beer; if it remains this way long-term, demand for sorghum
will continue to be high.
2. Kenya is a
member of the Common Market for Eastern and Southern Africa (Comesa), a
bloc whose treaty entitles zero-rating tariffs for some goods produced
by respective countries. What has been the impact of the Comesa tariff
policy on KBL and its affiliates?
Geoffrey Njukhilili, Bungoma
Most of KBL’s business is conducted within Kenya, so most of our products are sold locally.
However, we export to South Sudan, who are members of both Comesa and the East African Community.
In this market, we benefit from the preferential rates as stipulated in the agreements within the trading blocs.
Notably,
East African Breweries Ltd (EABL), our parent company, also has
subsidiaries in Uganda, Tanzania, and we have affiliated businesses
across other Comesa markets, so we only export in special cases.
From the raw material perspective, we source over 80 per cent of our inputs locally.
We, therefore, only benefit from Comesa at a secondary level when we need some of the remaining 20 per cent of raw materials.
3. What has been the implication of the influx of foreign alcoholic brands into Kenya on KBL’s business?
Geoffrey Njukhilili, Bungoma
Foreign
alcoholic brands have been in this market for a while now and that is a
characteristic of Kenya’s free market, which KBL benefits from as well.
Our strategy is to offer consumers options at preferred packs and affordable price points, giving them the freedom to choose.
However, our biggest competition and challenge is the illicit/contraband products.
Besides
denying government billions in taxes and being a health hazard to
consumers, their presence presents an unfair playing ground for
legitimate manufacturers and sellers.
We are encouraged
by the significant enforcement efforts by the government and relevant
agencies on this front, and we hope they will be sustained in the
long-term.
4. Every time I hear of beer
manufacturers announcing their plans to invest more in the alcoholic
beverages industry, I think of how much damage beer is doing to families
rather than the enjoyment beer lovers get from it. What is your take on
this?
Francis Njuguna, Kibichoi
Our
brands are made to be enjoyed responsibly. We care passionately about
reducing alcohol-related harm through our own programmes such as Under
18 Asipewe, which is aimed at checking the sale of alcohol to those
under legal drinking age, and Utado? whose objective is to empower
consumers with information and tools on how to behave when interacting
with alcohol through partnership and collaboration with others.
Therefore, we seek to provide consumers with what they need to make informed choices about drinking or not drinking.
We
are also cautious about how we market our products: We recently signed a
thought-leading code of conduct with industry peers under the Alcoholic
Beverages Association of Kenya setting guidelines on how to
self-regulate the way we brand and market our products.
5.
For many years, the Rift Valley region has provided a huge market for
KBL products in its major towns. You have now opened a plant in Kisumu
and sort of bypassed Rift Valley. When do you think our local people
will directly benefit from jobs out of a massive KBL investment in this
region?
Dan Murugu, Nakuru
The
decision to set-up the brewery in Kisumu was informed by our strategic
and sustainability objectives: The site was already an operational hub
and the basic infrastructure was in place for us to set- up the plant.
However,
the largest multiplier effect of this brewery is, in fact, in the
sourcing of the raw material, distribution and retail, and that part of
the chain is projected to impact over 100,000 livelihoods in the next
coming year.
It important to note that the Rift Valley
region provides KBL with the majority of barley used to make other
brands such as Tusker.
We have already engaged county
governments across Rift Valley to drive conducive policies for farmers
and businesses and we expect communities in the region to benefit as
well.
6. I am a resident of Obunga, which
is adjacent to the Kisumu brewery. There are claims of a clandestine
recruitment for the plant to the detriment of the qualified and capable
local graduates. A large number of existing EABL staff are said to have
been exported from Nairobi to work in Kisumu. Other than providing
indirect employment opportunities especially to farmers, which is
laudable, don’t you feel it is also prudent to give direct jobs to
locals?
Carlos Oliech
First
of all, the community in Kisumu, including Obunga, has been very
welcoming and we are extremely pleased with the progress we have made
ahead of the plant’s commissioning.
This is an outcome of various engagements between KBL, the local community and county leaders at large.
Our
recruitment process has been very open. When we started building last
year, we advertised for various technical positions in the local media.
In all, we recruited 25 mechanical operators and we doubled this up as a skills programme.
We are mainly using local labour to construct our plant and have proudly maintained an 85 per cent local hire average.
Since
this is a modern brewery, we have adopted state-of-the-art technology,
meaning that more indirect job opportunities will be in the sourcing,
distribution and the retail end of the value chain than at the brewery
site.
7. You have invested heavily in the
Kisumu factory. This means jobs - especially for the youth around the
lake region and its surrounding areas. I come from Kisii County. I have
made several applications seeking a job in the production line. To my
dismay I have not received any reply. How can one get a job in your
organisation? I hold a degree and several certificates in food
technology, production and services.
Ruth Kemunto, Kisii County
The
KBL is an equal opportunity employer and we have provided a central
applicant platform through our career portal (www.diageo-careers.com) to
enable potential candidates, such as you, to express interest in our
vacancies.
All applications are reviewed accordingly,
based on the required qualifications. For those who do not meet the
eligibility criteria set out, we still retain their details on our
database for future considerations on more suitable openings.
8.
What are you doing to ensure former employees who worked tirelessly for
many years to achieve your goals also lead decent lives?
Charles Gitagia
Because
we realise the health of our business is always as good as that of our
employees, KBL has a long-held culture of encouraging them to align
their personal development goals to those of the company at the
beginning of every financial year.
We believe that such efforts help our employees put in place safety nets critical even after their employment.
Apart from our pension scheme, we have given them access to sufficient support and investment options.
9.
In a bid to protect the youth, the government came up with regulations
that specify the times when alcoholic and tobacco products can be
advertised. How have the regulations affected KBL’s business?
Hassan Mbuno, Nairobi
We are committed to the prevention of underage drinking in keeping with the law.
We
have invested heavily in behavioural campaigns targeted at adults who
have the responsibility to ensure that people under the age of 18 do not
access alcoholic beverages.
10. Every
year, the government targets alcoholic drinks for increased taxes. Do
you think this is fair? How come EABL/KBL still continue to declare
billions in profits despite increased taxes?
Patricia Mutheu, Nakuru
As
the oldest player in this industry, we continuously engage the
government, presenting our constructive feedback and insights around
various issues affecting the business.
Whereas excise
tax decisions are, at times, at variance with our position, we have
worked on some win-win industry developments in areas such the
lowly-priced Senator, making the strong case for elimination of illicit
alcohol in Kenya.
We have been advocating a sense of
tax predictability and, unlike in the past where increases were made
arbitrarily, we believe the recently announced inflation-linked excise
tax structure is a sustainable and fair model.
11.
What initiatives are you undertaking to push the organisation to new
frontiers, for instance any strategic partnerships to grow the market
share?
Brian Muya, Machakos
The largest consideration to grow market share relates to our ability to be continuously aware of the shifting market dynamics.
As
our market place becomes more urbanised and consumers’ tastes and
preferences continue to change, we have to respond appropriately.
12.
One of the key ingredients of your products is sugar. How do you ensure
contraband sugar does not find its way to your products?
John Wafula, Kakamega
All
the sugar used in our production process is of refined industrial white
variety, sourced directly from vetted and qualified manufacturers.
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