The East African Breweries Limited Business Essay


Globally, the beer market is estimated to have grown by 1.6% in 2008 to reach a value of USD 453.9bn, which Europe accounting for 49.2% of the total value and consumption to reach 2.0hl by 2013 (See figure 1.1 for World beer production), (Canadean, 2012).

Beer market and demand vary a lot across the world, for example, in mature western European countries the beer market are stable or slightly declining, while emerging countries such as Asian, Africa and Eastern Europe are showing a rapid growth rates. Internationally, the global beer consumption increased by 2.4% in 2010 which is below the 5%+ growth rate seen earlier in decade (Canadean, 2012).

The global and regional beer consumption growth rate varies as shown in the above graph. Asian market is the biggest contributor with the forecast to increase by 187 mhl between 2010 and 2016 with China having the highest volume growth of 43 per cent and 37% of the volume growth from emerging markets (SABMiller, 2012). According to Canadean, (2012) beer consumption in Asian and Africa is predicted to grow at a CAGR of 5.0% between 2009 and 2015, Latin America 3.0%, Middle East 5.5%, East Europe 1.5%, North America 0.5% and Western Europe 0.016%.

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Source: Canadean, 2012

Recently they have been a trend in alcohol production and worldwide trade showing that globalized alcohol beverages are playing a leading role in developing countries (Byrom and Lehman, 2009) and looking forward to enter Africa to cover up for the decrease share market in the developed countries. This developmental trend has been supported by the general increase of beer consumption worldwide where the four brewing giants, Heineken, AB Interbrew, SABMiller, and Carlsberg account for 42% of beer sold worldwide, (See figure 1.4 for the World Top Brewers,( Canadean, 2012).

Source: Canadean, 2012

Global beer firm such as SABMiller has more than 50 per cent of the whole beer market share in Africa, in volumes terms, Heineken, which is the main brewer in West African countries purchased two Ethiopian breweries, Diageo, the leader in Kenya and Castel, all these brewers account for approximately 80% of the African market (Economist, 2012). While their objectives in established highly competitive markets are to defend and possibly increase market share through strategic alliances and acquisitions, in high growth emerging markets their strategies are aggressive (Marinov and Marinova, 2000).

In Africa, beer industries consist of both small and large producers, contributing to production capacity of just above 1.0m hl per year (Economist, 2012). Recent research by Canadean (2012) shows that Africa produce 4.8 per cent of global beer, China 23 per cent, U.S.A 13 per cent, Russia 6 per cent, Brazil (6.0%) and Germany 5 per cent, but has the lowest global per-capita consumption rates of 6.0 litres pp, due to low purchasing power of consumers (See figure 1.5 for the Beer production) (Canadean, 2012).

Although most alcohol is produced and consumed locally, global firms use strategic alliances and sophisticated marketing technologies to penetrate to the developing countries market. This trend forces brewers with high internationalization aspirations, especially in mature markets, to develop and implement a strategy based on strategic alliances with strong international players (Marinov and Marinova, 2000).This has created high competition in the brewer industries and financial pressure as the firms are making significant effort to catch up with the leaders by improving they marketing techniques and constantly reviewing they strategic planning process in order to anticipate the consumer tastes and preferences.

Company Background

Source :( EABL, 2012)

East African Breweries Limited (EABL) was incorporated in 1922 and traded as Kenya Breweries Limited (KBL) until 1936, when it merged with Tanganyika Breweries Limited resulting to change of name to EABL. EABL headquarter is located in Nairobi and has 1775 employees. EABL is a public limited company and its majority shareholder consists of:

Diageo Kenya Limited

Diageo Holding Netherlands BV

Board of Trustees NSSF Board

Guinness Overseas Ltd

CFC Stanbic Nominees






Source: EABL, 2012

‘Tusker’ was the first beer brewed in 1923 and became the most popular beer in Kenya, also highlighted as a source of Kenyan Pride in 1990’s. In 2002, EABL and South African Breweries International (SAB) signed license agreements and consent for share exchanges in Tanzania Breweries Limited and Kenya Breweries Limited, and after a prolonged marketing war the agreement was for the SAB to shut down its brewing plant in Thika, Kenya the Castle Breweries Kenya Limited .

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In 2010, EABL acquired a significant interest in Serengeti Breweries Limited, the second largest brewing company in Tanzania and in November 2011, it commissioned a new brewery in Tanzania as a part of the continuing investment (Diageo, 2011), in order to meet consumer demand and to strengthen its position as the top beer and spirits distributer in the East Africa community.

EABL along with its subsidiaries has range of supporting industries such as Glass industry which provide containers and bottle products, East Africa Malting industry which supply quality raw materials, distilleries, breweries, distribution network across the East African region and engaged in marketing, brewing/manufacturing beer brands which include the Kenya’s leading brand- Tusker (the flagship brand and a Kenyan icon).Others brands include Bell lager, Pilsner ice, Serengeti Premium Lager, Pilsner Extra, Guinness, White cap, Senator, Allsopps and Smirnoff, and spirits brands includes Vodka, Whisky, Brandy and triple refined spirits. The company also manufactures non-alcoholic drinks and exports its products to Rwanda, Burundi and Southern Sudan (EABL, 2012).

Maybe include EABL core value and company structure

2. Research aim and objectives

The main aim of this research project is

Evaluate the strategic planning and marketing effectiveness by East African Breweries Ltd (EABL).

The main objective is:

Examine EABL key supply-side and demand trends.

Analyze EABL market trends and market growth.

2.1 Research Questions

The research questions are as follows:

Does EABL maintain and build competitive advantage over the competitors?

Which variable of the marketing mix are most or least emphasized by EABL?

What are the marketing opportunities of EABL brands in the future?

2.2 Research hypothesis

The research hypothesis of this research project is to determine whether the EABL strategic planning and marketing techniques used, if they are effective or not.

3. Overall structure

The overall structure of the research is designed to explore and to provide a framework which will be used in meeting the research aim and objectives. The two research questions forms the basis of the research and offers an insight into the complex world of the brewing industry particularly to East Africa Brewery limited (EABL). The research is divided into chapters each which sub sections. Chapter 1 provide the background of the research project, setting out clearly the research aim, objectives and the research questions.

Chapter 2 provide a critical review of the literature on strategic planning and marketing effectiveness. Evaluation will be carried out in order to identify research gaps in the literature by using relevant theoretical frameworks such as Ansoff matrix, and Competitive advantage and SWOT analysis.

Chapter 3 discuss the research methodology/design used for data collection, the methods and techniques used to analyse the findings and limitations of the research design, data analysis and approach.

Chapter 4 discusses the results and analysis derived from the current secondary literature. In this chapter, key findings will be presented in tables, graphs, charts and results will be interpreted

Chapter 5 provide an overall summary of key findings of the research project, limitations of this research and recommendations for future research will be considered.