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Pepsi plans switch to plastic bottling

By Patrick Kagenda

Crown Beverages Ltd, the manufacturers of soft drinks Pepsi, Mirinda, Evervess and Seven Up are re-shaping the packaging of their products.

Simon Lugoloobi, the Chief Executive Officer at Crown Beverages Ltd, told The Independent that the company was injecting US$13 million (Shs 26 billion) to import the new packaging from Germany.

The new line will churn out the soft drinks in plastic bottles instead of the traditional glass bottles.

The new packaging line has a capacity of turning out 40,000 bottles per hour.

Lugoloobi however said the global financial meltdown has had a negative impact on the demand side of their products on the market as the cost of imported inputs, which which constitute 70% of the company’s materials, has shot up by 30%.

The depreciation of the shilling relative to the dollar, lack of a functional railway line, and high cost of using lorries also impacts the cost of production.

Lugoloobi said Uganda’s tax regime on soft drinks was high at 13% compared to Kenya, which charges 10% excise duty, which makes a 300 ml bottle in Uganda cost Shs 600 while the Kenyan one costs KShs 17 (about U Shs 400).

Other constraints on the industry include the low consumption per capita of Ugandans, at 22 bottles per year compared to Kenya’s 40 bottles, Tanzania’s 35 bottles , and South Africa and Syria’s 200 bottles per person per year.

Lugoloobi cited low purchasing power and a small middle class in Uganda as some of the reasons of the low consumption per capita. The soft drinks manufacturer is in the advanced stages of introducing its first ever one litre bottle on the Ugandan market, a product that will be unveiled in April this year.

 

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