2014 outlook: Cut-throat competition expected in Soft Drinks and Beer Industry

During the last quarter of 2013, the soft drinks industry underwent a major shake-up after Riham Cola and Azam Cola entered into the Uganda soft drinks market. While Riham (Hariss International) was dragged to the commercial court by Coca-Cola, over the use of the 300ml bottle and the contents in the bottle being an imitation of the Coca-Cola brand, Hariss International walked out of court scot free after it argued that no one had a monopoly of bottling a dark liquid in a clear bottle and that the names of the beverages were clearly different.

This is exactly what happened in 2009 when Nile Breweries Limited dragged Uganda Breweries Limited to court over the long neck bottle which had been introduced by Nile Breweries. The case also ended in each company settling its own costs. The war between Uganda’s two biggest beer brewers came as their parent companies, Diageo which owns UBL and SABMiller that owns NBL, struggled to break ties between themselves after the collapse of their six year partnership in Tanzania.

It had all began in 2002 when East African Breweries Limited based in Kenya and owned by South African Diageo entered into a partnership with Tanzania Breweries Limited, a subsidiary of SAB Miller, where both agreed to sell and grow each other’s brands. EABL was to sell and grow TBL’s Castle Lager brand in Kenya while TBL was to do the same with EABL’s Tusker in Tanzania. However disagreements over the pricing of the brands led to a breakdown in the relationship.

Like the two beer Giants, the Riham versus Coca-Cola dispute was settled amicably in a confidential settlement but somewhat turned tables over as the Riham Cola began trading without hindrance like the UBL long neck bottle did. However the entry of another player in the soft drinks markets (Azam – Cola) further upset the market dynamics and upped the competition forcing the big boys Coca-Cola and Pepsi to slash their prices by up to Ushs 500.

That may not stop just there but in 2014 as the battle for the market stiffens, the big boys could be forced further to rethink their market strategy.  On the beer scene, the traditional players Uganda Breweries Limited (Diageo) and Nile Breweries (SABMiller breweries) kept the market well supplied with underdog Parambot breweries the brewers of Moonberg beer trying to be felt.

However, with Nile breweries going for the much lower end market by the commissioning of its new Mbarara plant that is supposed to brew Chibuku and the Eagles, the market dynamics could tilt in its favour as UBL remains stuck to the upper class which does not drink that much unlike their cousins in the lower strata of the social standing. 2014 could be a game changer in both the soft drinks and beer industry as well.