Diageo’s East African Breweries now bank on spirits
Kenya | East African Breweries (EABL), which is majority-owned by drinks company Diageo, will start producing Diageo’s rum brand Captain Morgan locally as part of wider investments in its spirit business in response to growing demand.
The company told media in April 2018 that it has begun investing USD 14 million earmarked for the spirits division. This includes the purchase of a filling line for spirits that will double production at its plant on the outskirts of Nairobi.
The international rum brand Captain Morgan will be manufactured locally to cut costs and make high-end offerings more widely accessible to domestic consumers.
EABL’s domestic version of the spirit, Captain Morgan Gold, will retail at about USD nine per 750 ml bottle, which is half the price of imported bottles. Production is slated to begin in May, the company said. EABL plans to produce other Diageo spirits brands locally.
Sales of spirits at EABL reportedly grew 20 percent in Kenya last year, marking a shift in the East African nation where beer, including EABL’s Tusker, has long been the preferred alcoholic beverage.
According to reports, Kenya’s spirits market has fared better in recent years than that of South Africa, the continent’s most developed economy, and those in Nigeria and Angola, whose economies took a hit when oil prices collapsed in 2014.
Nairobi-listed EABL will face competition from Pernod Ricard, which imports Jameson Irish whiskey, and from domestic distiller Africa Spirits.
Kenya is Diageo’s fastest-growing market for sales of Johnnie Walker whisky, but mainstream spirits such as Chrome Vodka are also growing at more than 20 percent a year, EABL says. The company forecasts that spirits will contribute half of annual revenue within the next five years, up from 30 percent in 2017.
