Breaking the Multinational Monopoly on Kenyan Beer Sales

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Tabitha Karanja is CEO of Keroche Breweries, Kenya’s only homegrown brewery.

Knowledge@Wharton: Tell us about your company? What do you produce, how big are you, how old are you?

Tabitha Karanja: I am the CEO of Keroche Breweries and the founder. It was founded in 1997. We manufacture alcoholic beverages. We have beer, we have wines and we have spirits…. Beer is the main product.

Knowledge@Wharton: So how many different beers do you have, what is the name of your beer and what are your sales?

Karanja: At the moment, we have two beers — Summit Lager and Summit Malt. Our capacity is 1 million liters. We are doing 50% of that because the capacity expansion was done recently. We are hoping to reach full capacity in one year’s time. Then we can think about expanding across the African continent.

Knowledge@Wharton: What percentage of your sales are beer vs. wine and spirits?

Karanja: At the moment, it is 50:50.

Knowledge@Wharton: We don’t often see a beer company founded by a woman. How did you start this company?

Karanja: I was in a trade business. We were buying manufactured goods to sell to the people. It was a hardware shop. I thought, why don’t I go into manufacturing. I didn’t know what to manufacture.

I did market research and saw there was a gap in the lower end of the liquor market. The only players were the multinationals and they neglected the lower end of the market. People were left to drink whatever was available. It was not hygienic. I thought, why don’t I come up with a product that is hygienically produced, affordable and meets international standards? It was received very well. Within five years, we took over the market.

When we were working on that, I discovered that at the top end and middle market, consumers didn’t have any choice. One multinational had dominated the market for eight years. I then thought, why don’t I come up with a beer that offers a choice. (At that time, people could go to a bar and say they wanted a cold beer or not; there was only one brand.) I introduced a premium product — a beer that was naturally brewed and sugar free. When people drank it, they realized they had no hangover. It was again received very well. Within two years, we had to expand the brewery.

Knowledge@Wharton: At present, are your sales limited to Kenya?

Karanja: We are just in Kenya. But, of course, we go to Uganda. You can find people buying our beer. That’s unofficial. But we want to go to Uganda officially. And Tanzania, the whole region — the African market — by next year.

“One multinational had dominated the market for eight years. I then thought, why don’t I come up with a beer that offers a choice.”

Knowledge@Wharton: Tell us about your employee base.

Karanja: We have about 300 direct employees and thousands in the distribution network. Ninety-five percent of these 300 are professional because the technology we use for brewing is the latest. So it is a lot of skilled labor; 95% are engineers, brewers, marketers accountants and all that.

Knowledge@Wharton: As you look back at the past 10 years, what have been the most significant challenges that you’ve had to overcome with the business?

Karanja: The biggest was to break the monopoly of the multinationals. They were not ready to give up any percentage of their market, because they controlled 100%. People have seen the resilience, the determination and the focus that I’ve put into the business. And I’ve inspired many people in Kenya and now Africa. They’ve seen that it can be done. Especially being a woman, now people see we can do it.

“When people look at me, they don’t see me as a woman; they see me as an entrepreneur.”

Knowledge@Wharton: So how did you break these monopolies?

Karanja: Mostly it was through the support of the Kenyans. Our competitor used to pay the barmaids not to stock our products, put them under the counter. So I tried to come out and face the monopoly committee, the competition committees and the parliamentary committees and then the media. And the people said “we need to support this.” Then, when they tasted the beer they realized it’s better than what they were having before. So that is how I broke the monopoly.

Knowledge@Wharton: Tell us about how you as a woman lead. Is it significant that you’re a woman? Are you just a leader who happens to be a woman?

Karanja: I’m a leader who happens to be a woman. When people look at me, they don’t see me as a woman; they see me as an entrepreneur.

Knowledge@Wharton: Where did this entrepreneurial spark that you have come from?

“I believe the alcohol market is controlled by the multinationals. Because Africa is rising, Africans should have a share of their market too.”

Karanja: I can’t say my family was in business. I think it’s just that wanting to make a change. After dealing with the hardware business, seeing these are things manufactured, thinking why don’t I go into manufacturing. Then going there realizing the market was really controlled, that it was very hard to break. People had really started looking at me with hope. I knew if I didn’t push it, I’d kill a lot of dreams. So that’s what really has kept me going.

Every time I have challenges, I know I have to overcome them, I have to recover. So I push myself. I feel people behind me watching. I don’t want to give up so that people won’t ever say: “But you want to try this? You can’t make it. Remember, Tabitha tried and she was unable.” But today it’s proof that we can do it.

Knowledge@Wharton: Where do you think your company will be in 10 years?

Karanja: In 10 years I believe that we will be across the African continent. I believe the alcohol market is controlled by the multinationals. Because Africa is rising, Africans should have a share of their market too.

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Breaking the Multinational Monopoly on Kenyan Beer Sales. Knowledge@Wharton (2016, February 29). Retrieved from http://knowledge.wharton.upenn.edu/article/breaking-the-multinational-monopoly-on-kenyan-beer-sales/

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