Alvaro: Battle for Market Pitting Heavy Weights

Published on 19th August 2008

In seeking new markets, transnational companies have expanded rapidly by transforming their products and introducing other products. East African Breweries Limited being one of leading branded alcohol beverage business in East Africa so far has been outstanding in its collection of beer and spirits. With breweries, distilleries, support industries and a distribution network across the region, the group's diversity is an important factor in delivering the highest quality brands to East African consumers and long-term value to East African investors.

Since the introduction of Alvaro drink into the market by the East Africa Breweries Company Limited, the company has recorded sales totaling to millions of shillings in the market. Alvaro has been an unprecedented success in Nairobi with its pineapple and pear flavours attracting mostly the non-alcoholic consumers. EABL recently confirmed that they have sold over 7 million bottles as their whole year target was 9 million bottles. The result has instilled fears amongst their competitors in the beverage companies besides challenging other companies’ dominance in the market. Alvaro is targeted at adult consumers aged 24-35 years and comes in two flavours (pear and pineapple). Alvaro is targeting the middle to upper income class. It retails at Ksh25 for a 330ml embossed green bottle. For the very first time EABL has gotten the non alcoholic beverage right as it has been filling up tables in most restaurants and pubs.

Kenyan Members of Parliament joined in the war pitting other companies versus Alvaro; some against the sale of Alvaro to secondary school children because it was allegedly alcoholic, of course a section who disagreed argued that the allegations were untrue and unfounded. The Assistant Minister for Medical Services Danson Mungatana while touring the plant confirmed to the press and members of the public that the drink is indeed non alcoholic according to the government chemist who issued a certificate of analysis confirming that Alvaro contents are not only safe for consumption, but meet its classification as a non alcoholic drink.

This kind of battle has never been witnessed in our markets even in the recent past; it clearly indicates that your competitor can get rid of you from the market by employing all manner of tactics for instance involving the parliamentarians. It is queer that this time round the “big guys” seems to trust results from an unnamed lab by students! Is this how far the battle for market space can go? Is there something more to this?

East African Breweries Limited launch of Alvaro, a new malt-based non-alcoholic drink is the strongest signal yet that the brewing giant has received ever. The test results played a great role in the market as it discouraged exaggeration and discredited unreasonable view that the drink was alcoholic. And it has gained a moral perspective in the society.

With the introduction of Alvaro, EABL is taking on Coca-Cola, a multinational heavyweight and the largest beverage company in the world with 2007 profits of $5.98 billion (Sh388.7 billion).

The high sales Alvaro has received has indeed set up the battle front for market share in the soft drinks market with analysts comparing it to the EABL versus Castle Lager battle a few years ago. The soft drinks market in Kenya is huge and is dominated by carbonated soft drinks according to Euromonitor International. While EABL is upbeat about Alvaro’s prospects, their new competitor, analysts of the soft drinks market see the entry of Alvaro as part of a pattern of diversification being done by most of the beverage companies. In the Kenyan market, Coca-Cola has gone into bottled water with its Dasani brand and juices with Minute Maid and Appletizer. Softa Bottling Company also has bottled water retailing under the brand name Angelweiss and ready-to-drink juices. The company is also thinking of going into the fresh fruit juice market.

Crown Foods Limited which produces the Keringet brand of mineral water has announced plans to launch a soft drink this year, while Keroche which until last year was making fortified wines is getting into beer production and possibly bottled water as well.

In this battle, the heavy weights companies are fighting to protect their dominance in the market. Companies usually simulate moves and counter-moves in a commercial setting for market space if they sniff their main competitors have stepped up their brands and invaded their turfs.

The rationale for running a business war game, is a tool that is of particular use when the competitive environment is undergoing a process of change, as it allows decision makers to consider how different organizations can react to the change, and each other and this is very healthy move in the business sector as long as malicious allegations are not made. It is upon competitors to try n meet the consumer demands so as to stand out. Simple gimmicks don’t work in Africa; we only enjoy quality from Africa by African.

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