It’s time for beer drinkers to celebrate
Nile Breweries Ltd has broken ground on a new brewery in Mbarara, targeting the fast-growing affluence of Western Uganda and the underserved but growing Rwandese market.
On Feb. 9 Nile Breweries Ltd (NBL) broke ground for construction of a new US$80 million (Shs190 billion) brewery in Ruharo, Mbarara, expected to start production in 2013. Local company Excel Construction is the main contractor.
According to the Managing Director Nick Jenkinson, the location was chosen due to its close proximity to a reliable source of water in River Rwizi, and access to power and major transport routes.
“Western Uganda constitutes our biggest and fastest growing beer market and Mbarara was considered ideal because of its status as the major transport hub for the region and its superior infrastructure,” Jenkinson said at the ground-breaking.
NBL operates a single brewery on the River Nile in Jinja which started production in 1956 and underwent a major US$29 million expansion in 2009, doubling production to 1.8 million hecto litres (180 million litres) per year.
The new brewery will produce 65 million litres (5.5 million crates) of beer per annum, and will be expanded to equal the main plant at 1.8 million hectolitres by mid-2013, to bring the company’s total capacity to 360 million litres of beer per year.
The plant brings to US$130 million NBL’s total major investments over the last three years, including US$80 million for the new brewery, US$29 million for expansion of the Jinja brewery in 2009, and US$25.6 million on a malting and effluent treatment plant to be completed this year.
The brewery, which will brew the bulk of NBL’s portfolio of beers, including Nile Special, Club Pilsener, Eagle Extra and Eagle Lager, is expected to create 162,000 new jobs, including revenue-streams for farmers in Kigezi, Kabale and Ankole to grow maize, sorghum and barley.
The company already has over 20, 000 farmers supplying inputs to the Jinja plant.
Jenkinson said the plan is to “increase local inputs to over 90% of brewing requirements by 2014,” from the current 70%.
Demand growth
Beer makers are pressure to keep up with the fast growing of demand for beer – with consumption up by 28% over the past year – as economic growth and affluence create more drinkers.
“GDP growth and a rapidly increasing population are driving consumers to trade up from cheap informal alcohol to more expensive commercial branded, a trend that is expected to continue as the economy expands and consumers become more affluent,” Jenkinson said.
Even though Uganda’s average per capita beer consumption is still relatively low at around 8 litres per year, compared to around 60 litres in South Africa, it has been ranked by WHO as having some of the highest alcohol consumption in the world, largely due to local brews.
The industry is also being driven by competition for the regional market, largely between SAB Miller, which owns NBL, and East African Breweries which owns the current Uganda market leader, Uganda Breweries Ltd.
“Our intention is to be seen as the best producers of beer in the country,” Jenkinson said. The Mbarara plant will sit on 30 acres of land the company purchased at Shs 70 million each from land owners in Ruharo, including a primary school that was relocated.
The company says it will be more efficient than the one at Jinja, with water usage meeting the international standard of 3.5 litres of water per litre of beer, a significant improvement on the Jinja water usage of 4.6 water litres per litre of beer.
Government officials have welcomed the new brewery. Jenkinson said it would increase NBL’s revenue to government, already on the rise from Shs40 billion in 2004 to Shs175 billion projected in 2012 - a compound annual growth of 205%.
Tom Buringuriza, the acting executive director of the Uganda Investment Authority, said Uganda’s economy needs such heavy investments to grow.
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written by steven kasiko, February 19, 2012
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written by PaulR, February 21, 2012
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