Uganda: Uganda Breweries Ltd’s Managing Director speaks out on challenges

Mr Baker Magunda, 39, was recently appointed the first ever Ugandan Managing Director of Uganda Breweries Limited, allAfrica.com posted on March 6. Business & Finance's Muhereza Kyamutetera, asked him how he plans to keep UBL ahead of the pack. Below are the excerpts:

“My name is Baker Magunda and I will be making 40 this year. I went to Makerere University where I studied Economics. I also hold an MBA from Makerere University Business School.

I started my working carrier with the Coca Cola Company where I did various assignments in sales and marketing till 1999 when I joined Uganda Breweries as a Brand Manager. I was in charge of Bell Lager and a couple of other international brands we were doing at the time like Carlsberg and Tusker Malt up to 2001.

At the end of 2001, I was seconded to the Diageo head office where I worked for two years as acting Brand Manager for Guinness in Africa. My duty was to look after key markets in Africa like Ivory Coast and Cameroon. After the two years, I joined Guinness Nigeria Plc where I stayed for about a year and was then posted back to UBL as Marketing Director in March 2005.

I worked in that position for six months. I was then appointed Executive Director Marketing and that is what I have been doing until I was appointed Managing Director.”

What has been the performance of UBL's products on the domestic and export scene?

“First of all, I should say that contrary to most people's knowledge, UBL is not only a beer company. We also have a very good business in spirits. Whereas Bell Lager is our flagship beer brand, Uganda Waragi is our lead brand in spirits. We also have other international brands like Guinness and Tusker.

On how we have been doing, UBL is clearly the leader in the branded alcohol business by virtue of the range of brands that we have. We have a very good market share and have posted very good returns for our shareholders.

Performance has been very good -in growing our local market, in the last 18 months, largely driven by premium brands like Senator Lager. In the spirits category, most of our growth has been driven by Liberty, a brand we launched in April last year.

Our exports have been doing well and growing. I would like to look at our exports in two buckets and that is; exports to the international market that is mainly the US and the UK and then regionally.

Internationally, we have opened distribution channels in the UK and we are doing very well with Tusker Malt, Bell Lager and Uganda Waragi. For Uganda Waragi and Bell, we are pleased that for the last three months, you can now find these brands in big Supermarkets like Tesco and Safeway; you can at least find our brands in 16 major outlets in London and Manchester.

In the US, we have got a distributor and we are setting up a distribution centre, which will be dealing out our brands in places like Boston, where we are already doing good business with Uganda Waragi and Bell.

Coming back to the regional markets, it is more complicated than you would like to think. Yes, we are doing good business in Rwanda. Although it is still small, it is growing steadily, but we have some issues with transport and competition with local brands.

The challenge is how do we turn these challenges into opportunities and how to enhance the distribution network out of Kigali. In Congo and Sudan, the challenge is whom do you deal with? How do you get the right people with the right capital? How do you get taxes paid and to who? How do we get the right paper trail and how sure can you be that you are dealing with the right companies? These are some of the issues we are trying to grapple with, especially given the history of the two places. Yes, the potential is there and we do not deny it but getting things smoothly is still an issue.”

- The branded alcohol market here is mainly perceived to be some sort of oligopoly between some few big heads. How hot is the market?

“First, I should say that overall, branded alcohol business in Uganda has been growing, but the key thing to note is that the brands that we know and those that exist, actually consist a very small margin of the alcohol market.

There is a lot of alcohol consumed in this market, which is not branded; some of it is traditional brew like Ajono, Malwa, Kwete and so on and others are spirits like Kasese, Llira Lira etc. These make about 60 percent of the market.

This means the potential in branded alcohol in still big since there is still a very big portion of the untapped market and the challenge we have as an industry is how do we come out as an industry with quality brands that are accessible to all?

That is the next set of challenges that all of us who are the big players in the industry need to be addressing.

About competition, it is stiff and growing and becoming unconventional. This is because the people who deal in the unbranded alcohol are small, their overheads are much less and many of them do not pay tax. Another issue especially in the area of spirits, is that we have seen the number of players increasing tremendously over the last couple of months; there are about 41 producers of spirits and this is quite big.

Because their overheads are small; the raw materials used in distilling and blending are cheaply available, they are able to produce all sorts of cheap brands and given the income levels of most of the consumers, these small guys have been able to tap into the market as well.

We as a leading company, have some standards we need to maintain in terms of quality, ways of trading and social responsibility- such as making sure we don't market to underage people, making sure we pay our taxes on time so it becomes a whole different dimension when you are faced with all these kinds of competitors. We welcome competition as long as they play the rules of the day.”

- UBL has been running a responsible drinking campaign, which is a kind of paradox. How do you hope to increase your sales if you are telling people to watch their drinking habits?

“We recognise that the alcohol brands, which we sell if abused, can be harmful to the human body. What we are trying to do in this campaign, across the region, is to avail information both to our current consumers and potential consumers- information that is good and factual and which they can use in making their choices in case they want to consume some of our brands.

Here, we look at issues like how to use our brands together with water, eating before drinking and avoiding driving when drunk. We also encourage them not to forsake their other social responsibilities.

Whether this plays against our intention to grow, we don't believe so because there are lots of untapped opportunities, especially amongst those that haven't yet hopped on the branded alcohol business. Besides, it is our responsibility to make sure that our current consumers live longer and they can live longer only if they live responsibly.”

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