KBL invests in job creation and farmers' welfare

In this interactive series, we invite readers to send in questions to selected public figures. This week, Kenya Breweries Managing Director Jane Karuku responds to your questions.

1. To sustain your multibillion shilling Kisumu factory, you intend to contract sorghum farmers for the raw materials. How have you planned to insulate this model against abuse by your managers or brokers linking you with the farmers as witnessed in the sugar industry, where farmers receive negative returns after dubious deductions being done by the companies?

Komen Moris, Eldoret

To begin with we have already contracted over 15,000 farmers from western Kenya for the Kisumu brewery.

This means we now have over 45,000 sorghum farmers across Kenya, who will deliver the crop to our breweries in Nairobi and Kisumu for use in production of our iconic Senator beer.

This model has been hugely successful since we started its production in 2009. In the year ending July 2018, farmers delivered 31,000 tonnes of sorghum worth Sh1 billion, and the commercialisation of this activity has resulted in a huge socio-economic transformation.

There is a huge potential for the growth of Senator, as illicit alcohol consumers seek safer, quality drink options, so our demand for sorghum as a raw material for Senator will potentially remain high.

The current tax regime is encouraging, given the sensitivity of this lowly-priced beer; if it remains this way long-term, demand for sorghum will continue to be high.

2. Kenya is a member of the Common Market for Eastern and Southern Africa (Comesa), a bloc whose treaty entitles zero-rating tariffs for some goods produced by respective countries. What has been the impact of the Comesa tariff policy on KBL and its affiliates?

Geoffrey Njukhilili, Bungoma

Most of KBL’s business is conducted within Kenya, so most of our products are sold locally.

However, we export to South Sudan, who are members of both Comesa and the East African Community.

In this market, we benefit from the preferential rates as stipulated in the agreements within the trading blocs.

Notably, East African Breweries Ltd (EABL), our parent company, also has subsidiaries in Uganda, Tanzania, and we have affiliated businesses across other Comesa markets, so we only export in special cases.

From the raw material perspective, we source over 80 per cent of our inputs locally.

We, therefore, only benefit from Comesa at a secondary level when we need some of the remaining 20 per cent of raw materials.

3. What has been the implication of the influx of foreign alcoholic brands into Kenya on KBL’s business?

Geoffrey Njukhilili, Bungoma

Foreign alcoholic brands have been in this market for a while now and that is a characteristic of Kenya’s free market, which KBL benefits from as well.

Our strategy is to offer consumers options at preferred packs and affordable price points, giving them the freedom to choose.

However, our biggest competition and challenge is the illicit/contraband products.

Besides denying government billions in taxes and being a health hazard to consumers, their presence presents an unfair playing ground for legitimate manufacturers and sellers.

We are encouraged by the significant enforcement efforts by the government and relevant agencies on this front, and we hope they will be sustained in the long-term.

4. Every time I hear of beer manufacturers announcing their plans to invest more in the alcoholic beverages industry, I think of how much damage beer is doing to families rather than the enjoyment beer lovers get from it. What is your take on this?

Francis Njuguna, Kibichoi

Our brands are made to be enjoyed responsibly. We care passionately about reducing alcohol-related harm through our own programmes such as Under 18 Asipewe, which is aimed at checking the sale of alcohol to those under legal drinking age, and Utado? whose objective is to empower consumers with information and tools on how to behave when interacting with alcohol through partnership and collaboration with others.

Therefore, we seek to provide consumers with what they need to make informed choices about drinking or not drinking.

We are also cautious about how we market our products: We recently signed a thought-leading code of conduct with industry peers under the Alcoholic Beverages Association of Kenya setting guidelines on how to self-regulate the way we brand and market our products.

5. For many years, the Rift Valley region has provided a huge market for KBL products in its major towns. You have now opened a plant in Kisumu and sort of bypassed Rift Valley. When do you think our local people will directly benefit from jobs out of a massive KBL investment in this region?

Dan Murugu, Nakuru

The decision to set-up the brewery in Kisumu was informed by our strategic and sustainability objectives: The site was already an operational hub and the basic infrastructure was in place for us to set- up the plant.

However, the largest multiplier effect of this brewery is, in fact, in the sourcing of the raw material, distribution and retail, and that part of the chain is projected to impact over 100,000 livelihoods in the next coming year.

It important to note that the Rift Valley region provides KBL with the majority of barley used to make other brands such as Tusker.

We have already engaged county governments across Rift Valley to drive conducive policies for farmers and businesses and we expect communities in the region to benefit as well.

6. I am a resident of Obunga, which is adjacent to the Kisumu brewery. There are claims of a clandestine recruitment for the plant to the detriment of the qualified and capable local graduates. A large number of existing EABL staff are said to have been exported from Nairobi to work in Kisumu. Other than providing indirect employment opportunities especially to farmers, which is laudable, don’t you feel it is also prudent to give direct jobs to locals?

Carlos Oliech

First of all, the community in Kisumu, including Obunga, has been very welcoming and we are extremely pleased with the progress we have made ahead of the plant’s commissioning.

This is an outcome of various engagements between KBL, the local community and county leaders at large.

Our recruitment process has been very open. When we started building last year, we advertised for various technical positions in the local media.

In all, we recruited 25 mechanical operators and we doubled this up as a skills programme.

We are mainly using local labour to construct our plant and have proudly maintained an 85 per cent local hire average.

Since this is a modern brewery, we have adopted state-of-the-art technology, meaning that more indirect job opportunities will be in the sourcing, distribution and the retail end of the value chain than at the brewery site.

7. You have invested heavily in the Kisumu factory. This means jobs - especially for the youth around the lake region and its surrounding areas. I come from Kisii County. I have made several applications seeking a job in the production line. To my dismay I have not received any reply. How can one get a job in your organisation? I hold a degree and several certificates in food technology, production and services.

Ruth Kemunto, Kisii County

The KBL is an equal opportunity employer and we have provided a central applicant platform through our career portal (www.diageo-careers.com) to enable potential candidates, such as you, to express interest in our vacancies.

All applications are reviewed accordingly, based on the required qualifications. For those who do not meet the eligibility criteria set out, we still retain their details on our database for future considerations on more suitable openings.

8. What are you doing to ensure former employees who worked tirelessly for many years to achieve your goals also lead decent lives?

Charles Gitagia

Because we realise the health of our business is always as good as that of our employees, KBL has a long-held culture of encouraging them to align their personal development goals to those of the company at the beginning of every financial year.

We believe that such efforts help our employees put in place safety nets critical even after their employment.

Apart from our pension scheme, we have given them access to sufficient support and investment options.

9. In a bid to protect the youth, the government came up with regulations that specify the times when alcoholic and tobacco products can be advertised. How have the regulations affected KBL’s business?

Hassan Mbuno, Nairobi

We are committed to the prevention of underage drinking in keeping with the law.

We have invested heavily in behavioural campaigns targeted at adults who have the responsibility to ensure that people under the age of 18 do not access alcoholic beverages.

10. Every year, the government targets alcoholic drinks for increased taxes. Do you think this is fair? How come EABL/KBL still continue to declare billions in profits despite increased taxes?

Patricia Mutheu, Nakuru

As the oldest player in this industry, we continuously engage the government, presenting our constructive feedback and insights around various issues affecting the business.

Whereas excise tax decisions are, at times, at variance with our position, we have worked on some win-win industry developments in areas such the lowly-priced Senator, making the strong case for elimination of illicit alcohol in Kenya.

We have been advocating a sense of tax predictability and, unlike in the past where increases were made arbitrarily, we believe the recently announced inflation-linked excise tax structure is a sustainable and fair model.

11. What initiatives are you undertaking to push the organisation to new frontiers, for instance any strategic partnerships to grow the market share?

Brian Muya, Machakos

The largest consideration to grow market share relates to our ability to be continuously aware of the shifting market dynamics.

As our market place becomes more urbanised and consumers’ tastes and preferences continue to change, we have to respond appropriately.

12. One of the key ingredients of your products is sugar. How do you ensure contraband sugar does not find its way to your products?

John Wafula, Kakamega

All the sugar used in our production process is of refined industrial white variety, sourced directly from vetted and qualified manufacturers.