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Meta Abo Brewery is aggressively expanding its market share in Ethiopia. Francis Agbonlahor is the Managing Director of Meta Abo Brewery which was acquired by DIAGEO, the world’s leading premium drinks company with a collection of alcoholic beverage brands across spirits, beer and wine for USD 225 million two years ago. Capital’s Groum Abate sat down with him to talk about the beer business in the country.
Capital: How is the beer business going now?
Francis: I would say the business environment is good, and we are engaging with basic partners to ensure Meta is available all over the country and we managed to do that. We are proud of that. The reason why we came here is because we see Ethiopia as a strategic market. We are really privileged to be here. So overall I would say it is going well and we are dealing with challenges along the way. Our new brand Malta Guinness is doing very well. The public’s feedback has been amazing as the new brand is alcohol free. We are also expanding the capacity of the factory in Sebeta and the production capacity has now doubled after we expanded. . One issue I’m sure you are aware of is getting the raw material for us to run production, that is one of the issues, getting foreign exchange to be able to import critical equipment and spare parts that we require can really be a nightmare in terms of the whole process, you have to go through and the delays that result from that, that kind of bureaucracy creates a lot of challenges for international businesses like ours. But having said that, I think the Ethiopian environment remains optimistic, the GDP growth is still positive and it has worked out well with consumers and customers in terms of acceptance of the Meta brand and there are many more people who are switching to Meta beer, so in that respect I would say the whole environment remains positive. There are opportunities and challenges that we need to continue to deal with. That would be my assessment of what the business is like at the moment.
Capital: Can you tell me any specifics about the expansion?
Francis: We were clear that when we came out here we were here for the long run. We came to Ethiopia not to just pass by. We are here and being here means we invest and we are investing. We acquired Meta brewery by paying USD 225 million and that was just the ticket to get here. We are very proud that we got the opportunity to go into the whole privatization process and it was very transparent and very well managed. Having been here as you know the Meta brewery has not really received the type of investment it should have received over the years. As Diageo we were clear that we needed to invest more in building capacity to boost production, but also with new technology, to be able to put the right capability and the right system to enhance production. So beyond the 225 million we paid to acquire the business, we have invested around USD 50 million to expand the capacity. We made this investment just after we came out here, just after we acquired Meta and it has taken quite a while because they are brand new equipments that were being manufactured; now we are very pleased. This expansion will also maintain our presence everywhere in the country. In the first 12 months of acquiring Meta we concentrated on the market here in Addis Ababa but now we are all over the place around the country. In the last six months we have heavily expanded our business to other areas.
Capital: What do you say about the competition in the market?
Francis: As Diageo we love competition and we know the game as we have many years of experience. Competition is very good as we have to work to produce the best quality in which the customer will get the best quality that comes from this competition.
Currently we are doing well in terms of market share, many more consumers are switching to our brands. If you compare things to where they were I think we have made significant progress not just in terms of increasing the number of consumers that drink Meta beer but also in terms of bars and agents that are willing to partner with us. When we first came here to acquire the business, in Addis Ababa for example, there were many bars where you would not find Meta beer, but now there is hardly any bar in Addis Ababa where you will not find Meta beer. And that is creating a unique opportunity for us and we are delighted and grateful for the vast audiences for agreeing to partner with us and for agreeing to stock Meta, to give the consumer a choice. We believe the consumers have the right to choose what they want to consume. If they want to consume this particular brand or they want to consume something else, they need to make that choice. So all in all we are very happy about the competition. But I have to say it is beyond our expectation but this is our day to day life. We operate in a fierce market all over the world.
Capital: Do you have any plan in building a new brewery in other locations apart from expanding the one you have now?
Francis: There is one thing. You can determine how you expand your foot print. You can say you will expand your business from one location or you can expand from different locations but you invest the same amount of money or even more from one location expanding your business. We have all options. However at the moment we are satisfied with what we are doing by doubling and tripling the capacity in our brewery at Sebeta. When the time is right we will see about another option outside Sebeta but currently we are doing great with our facility at Sebeta, which in fact is the best brewery in the world.
Capital: Any plans on launching new products?
Francis: Well Diageo is the world’s leading premium drinks business. As you would know, we have an array of brands, fantastic brands all over the world in over 80 countries; in fact we have well over 200 brands. So launching new brands is what we know how to do well. We recently launched the really great Malta Guinness in style. That creates a unique opportunity for us and for our consumers in Ethiopia. And just as we do in many of the markets we operate, we continuously look at innovation and renovation. We do that in service of the consumers. So at the appropriate time we will continue to look at what opportunities exist in terms of innovation and new brands and look in house and see what we have in our portfolio that would be appropriate for this market, what the consumers will want and we will continuously look at those opportunities and then launch new brands.
Capital: What about the problems with the supply of bottles and plastic crates?
Francis: At the moment like any other industry the beer industry is expanding. However the structure is not expanding within the needs of the industry. So we are focusing on local suppliers in improving their capacity and quality. At the moment Addis Glass is providing us with a significant amount of our needs. Addis Glass is manufacturing Meta beer bottles flat out. In terms of plastic crates we have at least three local manufacturers that supply crates namely Universal, Tana and AB plastics. We are trying to determine how to continue this partnership for the longer term. Initially it was a bit difficult but now it is getting better. We are building the capacity of these manufactures that in turn will help the country. And we are also looking other suppliers until our demand is fully filled.
Capital: How much is your annual turnover?
Francis: This is what I will say, we are meeting our expectations. We came here and invested and we knew it was the right thing. So in the last two years the results are in line with our expectations so far. And we hope to exceed them in the future.
Capital: Any problems you are facing in regards to your business?
Francis: We have a very big problem with power supply for the brewery. And we are working with the relevant stakeholders to solve this persistent problem. This power problem wakes me up every day, which is also hampering our production. It is the biggest headache we have currently