70 years of brewing

“For a great night and a good morning” seemed like a rather strange tagline for an alcohol brand. Alcohol is not known for providing anything like a good morning because of its association with a hangover. That was the tagline of Bell Lager in the 2000s as competition with two other brands, Nile Special and Club Pilsner was heating up. Bell Larger is produced by Uganda’s oldest alcohol brewer, Uganda Breweries Limited (UBL). UBL was founded in 1946, during the colonial era, in order to serve the need for alcohol brewed in Uganda. Uganda was then dependent on imported beer.

UBL was the 18th registered business in the whole of Uganda and the pioneering brewery in the country.

In July 2016, Uganda Breweries will be marking 70 years of existence in Uganda. Bell, which is the flagship beer for the company, first came into existence in 1950. According to The Brewing Industry: A Guide to Historical Records, a book by Lesley Richmond and Alison Turton, in 1950 Macclesfield Brewery, based out of Macclesfield in Cheshire, England had acquired an interest in UBL.

This was the first time Bell Larger was produced in the country. The name, according to East African Breweries (EABL) – they own at least 98 per cent of UBL – was derived from Port Bell, where the factory is located. The actual description of Bell Lager is that it is an American Adjunct Lager.

According to the Beeradvocate.com, American Adjunct Lagers are “Light bodied, pale, fizzy lagers made popular by the large macro-breweries (large breweries) of America after prohibition. Low bitterness, thin malts, and moderate alcohol. Focus is less on flavour and more on mass-production and consumption, cutting flavour and sometimes costs with adjunct cereal grains, like rice and corn.”

It is only until 1951 that UBL got competition from within the country with the founding of Nile Breweries Limited (NBL). By 1956, UBL had drawn interest beyond the Uganda borders into Kenya. EABL using its financial muscle acquired an interest in UBL in what was described as a move that would “allow both companies a regional presence as pioneers in the brewing industry in East Africa.”

From then on, it was growth for UBL as Uganda closed in independence.
According to UBL officials, by 1967, UBL was considered one of the largest companies in Uganda alone with a market capitalisation of GBP £600,000 (Shs2.7b) and about 800 shareholders, the majority of whom were Ugandans.

The post-independence era for the brewer was largely more of the same including additional investment in 1965 until 1974 when President Idi Amin nationalised the brewery. This marked the end of the presence of EABL in Uganda. In 1971, Amin had also nationalized the operations of Nile Breweries. During this period, Uganda’s economy was under sustained pressure by high inflation.

The operating environment for brewers was also tough because the weakened shilling meant importing raw materials at a higher price. The period lasted for almost 10 years. The performance of the brewer as a state enterprise was a bag of fortunes with sales rising as the country stabilised for a brief period. There was still political instability and there were no guarantees for sustainable. It was in 1984 that UBL was handed over to EABL but still Uganda was unstable.

The brewery was producing under capacity. There were often delays and it was not until after 1986 that there were much more realistic prospects for growth. From then on, EABL’s ownership of UBL has not been a subject of nationalisation except for some diplomatic rows between Kenya and Uganda. Also, there were the occasional allegations of sabotage on the railway, which delayed delivery of inputs like barely.

The economy started stabilising and seemed to follow a model that was business friendly, with the state taking a none-interventionist approach.

In the 1990’s, UBL’s capacity was 650,000 hectolitres. In 2001, this rose to 750,000 hectolitres.

“Today, our production capacity is over 1.2 million hectolitres. We remain a strong contender in a highly competitive industry and are shaping the alcohol industry in Uganda whilst playing a positive role in the society,” says Ms Rhona Arinaitwe, the communications manager.
In 1999, Uganda Distillers Limited (UDL), a government parastatal was taken over by UBL. This allowed it to acquire the licence to start producing Uganda Waragi. UDL was responsible for the production of Uganda Waragi since 1965.

According to EABL, Uganda Waragi “derives its name from “War Gin” as the “Colonial masters” referred to the local Gin that the locals would drink for “Dutch Courage” at the battlefields.”

Diageo acquires stake
In 2000, global brewing powerhouse, Diageo acquired a controlling stake in EABL. With it, UBL would now benefit from the deep pockets and expansion plans of Diageo. Diageo Plc has 50.3 per cent in East African Breweries Limited group (EABL) while EABL has 98.2 per cent shareholding in Uganda Breweries.

“Diageo as a brand was looking to grow its portfolio and presence in Africa and especially East Africa to capitalise on accelerating economic growth in the region. UBL was and is still the second largest company in EABL as such, part of the decision was because UBL was and is still a financially solid business with massive potential for growth,” Ms Arinaitwe explains.
Those dividends of having strong financial backing and much greater brewing history showed up in 2010.

“In 2010, we invested Shs44b in a new state-of- the art bottling line, which doubled the brewery’s capacity and improved bottling versatility. In 2012, we invested a further GBP £1.4 million (Shs6b) in installing a mash filter to support the use of local raw material sourced from within the country thus significantly improving our brewing capacity to over 1.2 million hectolitres a year. In 2015, we completed work on the refurbishment of our Effluent Treatment plant, a project that cost GBP £4.8 million (Shs21b) and significantly increased our capacity to treat our industry waste even if our capacity were to grow by thousands of hectolitres,” says Mr Nyimpini Mabunda, the outgoing managing director UBL.

Both UBL and NBL are often neck and neck in terms of market share. UBL’s strong sales point comes from access to brands such as Tusker Malt and spirits such as Johnnie Walker among others.

Local support

UBL now produces beer where it sources sorghum, cassava, and barley from the local market. Sorghum is acquired from the low-lying areas of Teso and Barley from the highlands of Sebei. The beer brands produced under this arrangement are Senator and Ngule. This has in part generated income for farmers and created jobs.

“Amongst the 22,000 people employed, 17,000 are farmers, who are guaranteed market to for the grains and materials the brewery uses in its production.

Amongst these are approximately 3,000 barley farmers, who earn net income of $2.7 (Shs12,000) daily; and 10,000 sorghum farmers, who earn net income of approximately $1.5 daily (Shs6,600),” Mr Mabunda says.