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Ngugi Kiuna is talking animatedly about an advertisement for Heineken, as he holds a bottle of the signature Dutch beer in his hand.
Ngugi Kiuna is talking animatedly about an advertisement for Heineken, as he holds a bottle of the signature Dutch beer in his hand.

“The tagline about the bottle being the only preservative is not an idle pitch. When it comes to health consciousness, it does not get better than this in the world of beers. And health has become a major issue in this business.”

Such adulation for the brand comes naturally to Mr Kiuna. For the last two years, his firm, Maxam Ltd, has been distributing Heineken in Kenya and trying to carve out space at the bar and drinkers’ throats for it, one bottle at a time.

When Maxam won the Heineken franchise in Kenya, the odds looked almost insurmountable. Besides its relative novelty, the firm was going head to head with the region’s biggest brewer and one of its most expansive distribution machines.

The beer market in Kenya, which statistics put at about 3.7 million hectolitres, is dominated by East African Breweries Ltd.

The listed brewer’s flagship Tusker brand alone (sold in 500 ml bottles) is estimated to have an 80 per cent share in Kenya, and its total volumes grew 27 per cent in the year to June 2007.

Interestingly, the Heineken brand was first brought to Kenya by EABL before Maxam took over the distribution rights.

The Dutch principals must have been unhappy with the market penetration achieved under the brewer and the fact that EABL also had brands fighting in the same market category, the most notable being Tusker Malt.

Two years after he set up a network for the premium Dutch brand with the aim of wresting at least 5 per cent of the beer market in Kenya, Mr Kiuna is happy with the results.

“We commenced the distribution of Heineken in mid May 2007. We were able to immediately deliver significant improvements in sales. True, running the franchise has been challenging but very positive. We have doubled sales in the first year and continue to grow,” he told Smart Company during an interview at the firm’s Kaptagat Road offices in Loresho, Nairobi.

Maxam, which is mobilised as a family business by the Kiunas, has invested some Sh20 million in building a distribution infrastructure for Heineken, while marketing has taken up Sh25 million. It has put together a 20-member team, most of them being in sales and marketing.

“We have invested in bonded warehousing where products are held prior to customs clearance and payment of duties and taxes after importation from Amsterdam.

Distribution is done both directly by Maxam vehicles and indirectly through appointed distributors and wholesalers,” said Mr Kiuna, who has recently been in the limelight as the chairman of Rift Valley Railways steering committee.

A quiet and unassuming businessman who serves on the boards of many companies, including listed ones, Mr Kiuna is also one of the 29 founder members of Transcentury, the country’s richest and most well-known investment club with a stake in firms as varied as RVR, East African Cables, Kenya Power & Lighting Company and Avery, among others.

Previously, he was CEO at industrial hygiene firm Johnson Diversey for 16 years.

Together with other members of his family, he parades a widely diversified portfolio of interests that include property and agrochemicals, besides distribution of consumer goods.

Maxam’s direct channel focuses on Nairobi and key accounts while distributors cover the other major towns in the country.

So far, the capital city and Mombasa remain the biggest markets for Heineken, which plays in the same space as brands like Tusker Malt and Windhoek and positions itself as a health-conscious beer, given its relatively low alcoholic content and the claim that it is a product of water, hops and malt.

As Maxam fights for space at the bar against an entrenched and better-financed monopoly, its immediate challenge is building a distribution network that can take it beyond its traditional markets into other major towns.

So why did he latch on Heineken for this young business, at a time when his firm had no legacy in distributing beer or any fast-moving consumer goods?

“Heineken was looking for an alternative, having failed to make an entry with the impact they were looking for in the Kenyan market,” he said. “As the best and most global premium beer in the world, it was easy to accept the challenge to make it an accepted brand in our increasingly sophisticated market.”

According to Mr Kiuna, Maxam’s integration with his other operations remains peripheral. “This is the only business that I have direct management of and is wholly independent of my other board interests.

But he deems the investment as worthwhile, especially as consumers, including beer drinkers, become increasingly conscious of their health.

“As lifestyle conditions become more widespread in Kenya, and people become more knowledgeable on the link between how they live and health, brands like Heineken are likely to become more visible. We want to be part of that evolution,” he said.