Kenya: Kwal Eyes Regional Market to Drive Sales

Nairobi — AFTER pumping close to Sh300 million into its modernisation project, the country's premier wines and spirits company, Kenya Wine Agencies Ltd (Kwal) is now preparing ground for a major expansion into the regional markets.

The company's Managing Director, Mr Gerald Masila, confirmed that Kwal, which has already established a branch in Uganda, is planning to spread its wings to Tanzania, Rwanda, Burundi, Eastern Congo, Southern Sudan and Ethiopia. It seeks to establish distribution networks for its brands in these markets.

"The plan is already underway in some countries. In Rwanda, we are planning to open a new inland bonded warehouse in Kigali to serve the domestic market and the wider Great Lake region," said Masila.

He says that plans are also underway for the company to enter the lucrative Ready to Drink (RTD) market and that it would soon relaunch its flagship brands such as Hunters Choice, Papaya, Simba Cane and Kibao Vodka to enable it grow its share of the domestic market and position the brands for the expected competition in the international market.

Since the liberalisation of the economy in the early 1990's, Kwal, a wines and spirit manufacturing company, has been experiencing mixed fortunes in its business.

The company had been a monopoly from inception in 1969 and was the market leader and sole supplier of a range of world leading premium wines and spirits brands.

But the liberalisation opened the doors for other players into the market who started to import wines and spirits, thus eating into Kwal's market share over the years.

The ambitious initiative is expected to mark the final phase of a turnaround programme that has been ongoing at the firm for the past two years.

The company has been on an aggressive turnaround mission and made its first profits in the financial year ending June 2006, after a prolonged period of under performance.

The recovery continued in the year ending June 2007, with the company returning to profitability and making achievements in other key performance areas.

This led to the company being rated the fifth best performing State corporation last year, and was the best performer among the State corporations in the ministry of Trade and Industry.

"We are committed to achieving the corporate objectives and to continue the turnaround and settle on a sustained growth path that will see the company continue with the recovery," says Masila.

Through expansion, Kwal says it expects its business to achieve better earnings growth and is also looking at healthier long-term returns.

It's the search for these aggressive earnings figures that has taken Kwal knocking at different countries' doors across the Comesa block in a programme designed to make it a major player in the wines and spirits business across the continent.

In the domestic front, Kwal's recovery strategy has been focusing on addressing the key challenges of product availability and eliminating stock outs in the market place. This has seen a continuous improvement in the supply chain process through implementation of an integrated enterprise resource planning system.

This is the strategy that kick started the ambitious plant modernisation process as well as investments in distribution and market expansion, which is projected to cost the company an estimated Sh300 million in the current financial year.

Of this amount, the company will spend Sh100 million on wine factory modernisation and Sh200 million on expanding its local and international market.

The modernisation, which the MD says has reached advanced stages will see the company replace and upgrade some bottling lines and also provide additional water supply from a bore hole that was sank mid this year.

"Ultimately, we expect the new plant to reduce production costs and ensure adequate production to meet the growing market demand," reckons Masila.

In July, Kwal opened a new depot in Nyeri town to serve the mountain region as part of the market expansion programme. Masila says that the new region, which was initially served from Nairobi, is now yielding encouraging results, with increasing sales recorded.

Three months ago, the company entered into a trade partnership with a wine manufacturer in Chile, Vina Ventisquero, which saw the introduction of exotic range of wine products from Chile into the local market.

In addition to its core business, the firm owns Yatta Vineyards Ltd, a subsidiary that grows grapes. The company also has a subsidiary in Rwanda called the Rwanda Duty Free Sarl, which specialises in travel duty free retail business at the Kigali International Airport.

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