What you need to know:
- Nile Breweries Managing Director Adu Rando, started out his career as a professional volleyball player before transitioning into the corporate world.
- Over the last two decades, he has risen through the ranks working in several African countries. He had a chat with Monitor on a range of issues, among them responsible drinking and trade in illicit alcohol
You have worked in different countries. How different is Uganda from the those you have worked in?
The formal market here is slightly smaller compared to countries such as Tanzania. This is because the amount of illicit alcohol here is larger, affecting consumption of legal products such as ours. So, the volume of beer consumption or the per capita consumption in Uganda is much lower.
If you look at more developed countries or even in Latin America, per capita consumption numbers range from between 40 and 60 litres per person, while here in Uganda it is just about nine litres.
This is an indication of how small the market here is, but importantly it is also an indication of the great the potential for growth. And even if we compare with some regional peers such as Zambia, Uganda’s per capita consumption is still below the 14 litres consumed in Zambia.
Talking of illicit alcohol, what is its impact on you as an industry and the economy?
Illicit alcohol consumption is certainly a huge challenge. Remember it is also not healthy, and they do not contribute anything to the tax kitty. As stakeholders and government we must deal with it.
We have held several rounds of discussions with different ministries, departments and agencies of government. We were recently visited by a Parliamentary committee and we spoke to them about challenges of illicit alcohol consumption.
Formal operations like ours generate more revenue for government. We are also conscious of what we put in the market.
We go to great lengths to ensure that it is healthy for consumption. So, we need support to be able to reach as many people as possible by cracking down on illicit alcohol.
You, and others stakeholders have been pushing the smart drinking campaign. Do you want people to drink or not?
Drinking too much alcohol is definitely not good for consumers and us as manufacturers.
People need to drink in moderation. And the growth that we are looking at is through responsible consumption of our products.
How has technology impacted you as a business?
We still have more than 90 per cent of our sales going through traditional channels, but we are changing a number of things to leverage on technology. We have invested hundreds of millions of dollars in creating an entire structure that is dedicated to technology and digital sales.
From that investment, we created the solution that we call business-to-business solution for digital sales. We now have an entire ecosystem that connects the brewery, distributors, customers, and in some markets, even the consumer. This was part of my previous role when I was in Tanzania. So, we are in the beginning of the journey but the results are very encouraging.
You are heavily involved in agriculture. Why should a brewer be concerned about agriculture?
Our agricultural programme in Uganda is probably one of the most successful cases we have seen so far. We have been able to create a fantastic value addition chain in the agricultural sector. We have largely fixed the production supply chain issue.
President Museveni is passionate about value addition and we have successfully done just that. In the last five years, we have directly trained about 25,000 farmers in digital and financial skills. Last year alone we trained directly about 10,000.
We train farmers on how to improve yields, how to best farm their lands and how to optimally use their land. We also supply them with certified high quality seeds. And this has seen them triple their barley yields in the last three years.
As a result the income of these farmers have grown because of volume and quality. As we speak now nearly 100 percent of our raw material is sourced locally. Imagine the impact this has on the economy and livelihoods.
What is the projection of the beer industry?
Beer consumption is a very good way to gauge how the economy is doing, given that it is one of the favourite products consumed when things are going well. In 2024 we will be investing in new equipment and even new warehouse space. We have belief that this year is going to be better than last year.
Problem of illicit alcohol
A report by Euromonitor in 2022 indicated that more than half of alcoholic drinks on the Ugandan market were illegal with some not fit for consumption,
The report under the title: Euromonitor Illicit Alcohol Trade revealed that at least 64.5 percent of alcoholic drinks on the market lack standards that are fit for consumption.
The 64.5 percent, the report noted, translates into at least 987,905 litres of the total industry consumption size of 1.53 million litres that was consumed between 2017 and 2020.
The report captures industry activity and tax losses between 2017 and 2020 due to an expanding illicit alcohol market, which is estimated to be growing at an average of 9.1 percent annually.
The report also noted that 45.4 percent of consumed illicit beverages are homemade, popularly known as waragi, which presents a larger danger on human health, especially in rural areas.
At least 266,044 litres of illicit beverages, the report noted, were counterfeits, while 36,153 litres were smuggled into the country.
The value of illicit alcoholic consumption, according to the report, was worth $1.91b (Shs7.25 trillion), for which it is estimated that government lost an average of $458m (Shs17.3b) in taxable revenue between 2017 and 2020.