Category Archives: EABL

My 100-shilling dilemma

Kenya Breweries made a 5 for 1 stock split late in 2004 to make their high-flying stock more affordable. Now, each time I have a 100/= beer as I watch sports or socialise, my inner selfish guide asks me why don’t I buy of their shares instead of the next round of beers?

Over the last four years, EABL’s share price has grown from 50 shillings to 600, and now trades at about 500 (actually 100 after the split). Whether this growth rate can be continued in future is questionable and risky. The company has fought and continues to face many battles – it ran Castle out of Kenya, and when underground liquors threatened its dominance, they contrived to have the government ban the sale of alcohol in sachets.

By 2008 the stock could go to 1,000 shillings or be down to 200, but it’s still a better return than the 0% return I get on Monday morning after drinking several 100/= beers. In addition, I’ll be assured of a healthy dividend each year as a good chunk of profit is repatriated abroad each year through dividends.

Business Briefs

Kenya Breweries has launched a new premium beer, White Cap Light, on the Kenyan market. New drink was announced by Patricia Ithau, the Marketing Director of KBL (former Ms. Kenya who was previously at Unilever, and driving force behind the Kenya National Dress 2004 and new Omo). Light beers account for 40% of the beers sold in the U.S. Also Nairobi Bottlers, in conjunction with Appetiser International, have introduced a new juice, that’s a blend of 6 blends of apple that is aimed at stylish and independent women.

Sun & Sand Beach Resort has been awarded 5 star status by the Ministry of Tourism.

Barclays Bank of Kenya and Commercial Bank of Kenya have each donated one million shillings to the Kenya open golf tournament that begins on March 9th at Karen Country Club

2, not 3 Nakumatt’s in CBD: Nakumatt will close Nakumatt Checkpoint (on Kenyatta Ave, next to I&M Towers) when they open Nakumatt Lifestyle (on Monrovia/Moktar Daddah Street) on Sunday Feb 20th

National Council of NGO’s chaired by Orie Rogo-Manduli will hold its 18th general assembly on April 15 at Ufungamano House. Pay 500/= at the door.

Business Briefs

Nakumatt over-expanding? As Uchumi has sunk ever deeper into debt and losses (financial and customers) the Nakumatt chain has grown by adding new lines such as automotive, housing, cars, furniture into their supermarkets – and making their brand “all under one roof.” But of late Nakumatt has added new stores in Nairobi such that they may fall into the trap of Uchumi where new stores eat into old store sales. There are now two Nakumatt’s on Ngong Road (within two kilometres of each other. And with two Nakumatt’s on Kenyatta Avenue and signs of a third one going up on Moktar Daddah street (between Jevanjee and K street), to be known as “Nakumatt Lifestyle”, there will be three Nakumatt’s in downtown Nairobi within a square kilometre of each other.

Kenya losing the peace dividend in Sudan: The Sunday Standard (Feb 6) identified how in-fighting and incompetence at the Kenyan Ministry of Foreign Affairs will lead to Kenyan companies losing business opportunities in the new Sudan to other countries. Britain and Denmark now have liaison offices in Southern Sudan, and South Africa has launched a massive program to bring their businesspeople to both Khartoum and Rumbek.

EABL cross-listing: East African Breweries, who are the pre-eminent presence on the Nairobi Stock Exchange, have announced plans to also be listed on the Dar es Salaam stock exchange in a few months. Kenya Airways was the first company to do this, late in 2004, and its’ stock price doubled within weeks as Tanzanian investors bought into the stock. Will this happen to EABL? They did a 5:1 stock split late in 2004 that made their high-flying share price (500+ shillings a share) more affordable. It now trades at about 100 shillings/share.

Carnivore case

The government has gone ahead and charged nine senior managers of the Carnivore and Kenya Breweries with failing to provide adequate security at a December concert incident where three students died. I believe the organizers took adequate security measures and that this case has no merit. The crowd got out of control and unfortunately, 3 people died, but there was nothing any amount of security would have done. Most people predict that the case will be dropped, companies fined, and families of the victims will receive some payments.

In all this, we must drown out the busybodies, i.e. leaders who have no agenda but to create moral mileage out of the tragedy.

Excerpts from Nation news stories

According to Carnivore Restaurant management and the event sponsors, United Distillers and Vintners (UDV), the stampede occurred at around midnight when impatient youth tried to force their way past the gates.

Police who had been deployed to the venue, however, said that the chaos was started by some drunken youths already inside the Carnivore grounds. A policeman had the butt of his AK-47 rifle broken as a group of drunken youths tried to snatch it.

Carnivore security manager Reuben Lumwaji said that 37 regular police, 24 traffic officers and 70 private security guards were hired for the event. There were three ambulances, paramedics and a doctor on the grounds, he said. It was standing room only as the crowd was estimated to be in excess of the 15,000 people that the event organisers had expected.

And by 10 pm, long queues had formed at the 16 gates where patrons were “vetted”. The vetting was a farce, with no proof of age demanded. As long as the patrons showed they had entry tickets, they were allowed in – including the underage. Other than confiscating knives and other weapons, the bouncers were not concerned about what revellers carried, including sachets of alcohol.

Nineteen-year-old Thomas Mboss was queuing to pay the Sh300 to get in when, suddenly, he was pushed from behind. He saw at least 20 people in front fall down. “One victim fell down twice, and was trampled by the others trying to stay upright. I overheard someone say the man was dead when they lifted him up the second time,” Mr Mboss, who waited in the queue until he made his way in, said. It was about midnight.

At about the same time, but at another gate, 18-year-old Edward Obado was also waiting in the queue as the crowd kept swelling. “There was so much shoving, jostling and pushing, it was even difficult to breathe,” he said. He remembered falling down, even as other patrons waited to pay and get in. “I fell down, and I’m lucky to be alive, as the bouncers rushed to me for first aid,” he said.

The tickets were cheap; Sh250 for advance tickets and Sh300 at the gate. High-ticket prices have in the past kept the number of attendants at manageable levels. This time, even underage youths could afford the ticket. With Sh500, such a youngster was able to gain entry and with a little prior planning, sneak in alcoholic drinks in mineral water or soda bottles, which many of them were carrying.

At the sixteen gates, body searches were casual as the security people’s main interest was to ensure that each person had a ticket. Requests that patrons produce identity cards to prove their age were similarly treated. They were also overwhelmed by the large numbers and could not search each and every patron. Quite a number of underage patrons managed to escape the bouncers’ scrutiny. Many were the patrons who sneaked in sachets of liquor into the grounds. In some venues, managers restrict entry if the maximum number of patrons is achieved. People were still being admitted into the venue by 3 am at least two hours after the stampede in which the three youngsters died. Many of the youths started leaving for home at 5 a.m.

At a press conference held at the office of the coordinator of the National Campaign Against Drug Abuse (Nacada), Mr Joseph Kaguthi, the pressure groups said the tragedy could have been avoided if Government agents had taken control of the event by enforcing the law. In a statement read by Prof David Ndetei, a lecturer at Nairobi University, the group accused Government agents of reluctance to enforce laws controlling advertisements, sale and consumption of beer and cigarettes. “Can we afford to sacrifice the lives of our youth at the altar of easy-coming tax money from selfish multinationals? Is the Government happy to run on blood money – for that is what taxes from beer and cigarettes are – without regard of future generations?” he asked. Media and advertising companies were criticised for promoting immoral behaviour and they must stop it, the group said. The church leaders called for the revocation of the trading licences of both Carnivore and Smirnoff.

Responding to the criticism, Smirnoff said it did not target young people in its advertising. “Only legal drinking age adults were targeted for the Smirnoff Experience event. No one featured in any of our publicity material and advertising is under the age of 25 years,” Dr Joyce said. And for the Carnivore, Mr Misumi added: “We do not sell alcohol to underage people and we support responsible drinking among adults.” He said a crowd had built up at the entrances where the crush happened because of delays caused by vetting those entering to ensure they all had tickets, were not under-age and were not carrying weapons.

Beer Wars Resume in Kenya

To celebrate the festive season, Kenya Breweries is selling 12-packs of its bottled beer at Uchumi and Nakumatt.

Meanwhile, there’s a new beer on the Kenyan scene – Meister from Egypt, which is being distributed by Njenga Karume. The beer is now available at Nakumatt in 500-ml cans that cost 90 and 100 shillings (for the 8% Meister Max).

Karume made a fortune in the 1970’s and 80’s as a distributor for KBL before he took off and partnered in Castle Breweries, which gave KBL a run for its money a few years ago.