Uganda’s non-alcoholic beverage industry has over the last 3 years witnessed a new wave of competition following the entry of new players. In addition, the economic environment over this same period has not been friendly forcing industry players to review their marketing and pricing strategies. Century Bottling Company’s (CBC) CEO Norton Kingwill speaks to the CEO Magazine’s Silvia Nyambura on how the company has and plans to continue keeping afloat.
You have been in office for 3 years now. What has been your experience so far? What is your view on Uganda’s non-alcoholic beverage industry?
The Non Alcoholic Ready to Drink (NARTD) Beverage industry in Uganda is underdeveloped. This is more exaggerated in sparkling soft drinks (sodas) where we lag behind our comparable peers in East Africa by between 25 percent to 75 percent. The industry’s biggest opportunities are to grow our consumer base through getting more people to drink more of our beverages, more often. With low per capita income in Uganda, affordability is the most critical driver of consumption.
What are your achievements so far?
The last 3 years have seen many achievements at CBC. Our primary focus is on driving business growth. We have grown our share of the NARTD over the last 3 years consistently and of every 5 commercial beverages consumed in Uganda, 2 are ours. We have grown our sales volumes by close to 10 percent compounded, over this period. This has been led by our growth of sparkling beverages (Coke, Fanta, Spite, Stoney, Novida and Krest), but also supported by our Juice (Minute Maid) and Water (Dasani) brands. We have been able to do this with significant increases in our manufacturing, distribution and sales infrastructure, investing behind our brands and investing heavily in ensuring we have a capable and engaged workforce.
In 2013 Century bottling reduced prices on its carbonated drinks citing slow economic growth. How sustainable has this move been and should we expect more cuts?
A key driver of consumption is to ensure our products are affordable relative to the basket of Fast Moving Consumer Goods (FMCG) that the consumer purchases. The price reduction of our beverages was in response to a slowdown in economic growth resulting in sluggish consumer demand. This was facilitated by inflation stabilizing and the strengthening of the Uganda Shilling. We will continue to ensure that our consumers have affordable beverages and it is available to satisfy all their consumption occasions.
Over the last year or 2 the industry has seen about 3 new players enter the market that for a long time was termed a ‘monopoly’ of 2 significant players. How has this affected your business?
Competition is good and healthy for business as it has given the consumers more choices. CBC however is focused on achieving its long term strategy, and will continue focusing on implementing it. The underdeveloped NARTD beverage consumption habits in Uganda provide opportunity for new players to enter the market. For this reason we will continue to focus on our strengths and provide our consumers with what they want.
To survive in a competitive environment you have to be innovative. What game changing innovations have you brought to the company?
As you know, innovation is key to ensuring the business grows, is relevant, stays healthy and remains competitive. Coca-Cola around the world is known and respected for global innovative and ground breaking ideas and we will continue to make significant investment in innovations. Innovations will be in the areas of increased product portfolio (new packs, brands and flavors), our pricing strategies, our manufacturing capability, our people practices, revolutionary marketing campaigns and back end technology.
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What other marketing strategies other than innovation do you have in place to remain relevant to the market? Any new products in the pipeline?
We will continue to meet the Coca-Cola quality promise to our loyal consumers, by providing them with the best quality beverages, consistently. We will back this up by focusing our marketing efforts on the key passion points in Uganda, of on music and sport. Uganda has a very young population, and we will ensure we have marketing programs in place which are relevant to the teens and young adults. We also have new products and packages in the pipeline, across all the categories we currently participate in, as well as in new NARTD categories.
Do you have any growth and expansion plans? What are your plans over the next 2-3 years?
We have installed new PET and Glass bottling lines in 2012/13, and will be installing additional PET capacity in 2015, to support the current growth trends, as well as to give us the opportunity to expand our portfolio into other NARTD beverage categories. The increased capacity will also give us the opportunity to serve as a manufacturing hub for Juice products in the Region.
What are the challenges you face in doing business in Uganda?
We have been doing business in the Uganda since 1986, and have been given tremendous support by the Government, local authorities and the business community, but it goes without saying that in the same breadth we have faced some challenges. Infrastructure for instance, is a key barrier to the growth of the economy and our business. In the last few years it is great to see the investments Government is making on Roads, Rail and Power, as these will deal with some of the major challenges that are holding the Country and our business back. Another area that is holding us back is the high level of Excise tax. Excise tax on soda is 13% in Uganda, while only 7 percent in Kenya and 5 percent in Tanzania. This tax disparity, coupled with Uganda being landlocked, contributes to us being uncompetitive as compared to our neighbors.
In conclusion, what does the future look like for CBC in Uganda?
Africa, with its high population growth, high GDP growth, high population growth and low per capita consumption, presents a huge opportunity for the beverage business. Uganda is an example of this growth opportunity. Coupled with the stable economic and political environment, we expect that the Uganda’s growth rates will return to the 7 percent to 8 percent levels, in the medium term. This, in turn, will translate to the growth of the NARTD beverage sector. CBC will continue to invest in our brands, infrastructure and our people to ensure we retain our leadership position and continue to satisfy the consumption needs of all Ugandans. I also want to further the cause of a better Uganda. That’s why I’m currently picking views and providing a platform for Ugandans of good will to discuss and deliberate on ideas that will transform Uganda on my Twitter page. You can join the discussions on my Twitter handle @nortonkingwill. I believe it all starts with a good idea.