Thursday, Oct 19, 2017
Others | Africa | Rwanda

Bralirwa

Beverage leader shows a $200m vote of confidence in Rwanda


1 year ago

Jonathan Hall, Managing Director of Bralirwa Ltd
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Jonathan Hall

Managing Director of Bralirwa Ltd

Part of the Heineken Group and a partner of Coca-Cola, Bralirwa (aka Brasseries et Limonaderies du Rwanda) is the largest brewer and soft beverage company in the country. Proudly Rwandan, with roots going back to 1959 and behind a host of CSR initiatives, it has grown in tandem with the country and was the first company to be listed on the Rwanda Stock Exchange. Managing Director Jonathan Hall discusses what’s in the company’s DNA and where the company and country are headed.

 

As a person who has been working on different continents, and is now based in Africa, what do you think is drawing all this attention to the African continent nowadays?

As a beverage company, what attracts us is a combination of factors: the young demographic, Africa’s potential for higher GDP growth, and its low per-capita consumption of both soft drinks and beer.

The caution is that, as we have seen in Southeast Asia in the tiger economies of the 90s, the rate at which the consuming middle class grows tends to be slower than initially hoped for.

The consuming middle class in Africa remains small, but its trajectory is undeniably positive. This has implications for pricing and we have to be always mindful of affordability.

 

It is also the youngest continent in the world and by 2040 it is projected to boast the largest labor force in the world. As Rwanda’s middle class is also expected to grow exponentially, how are you accommodating to this future demand?

A middle class is indeed emerging in Rwanda, and particularly in the capital city, Kigali. The changes regarding our market over the past five years are striking. On the one hand, there is an emerging modern “trade”, with the evolution of bars, restaurants and super markets. In Kigali, this development is quite rapid.

In Bralirwa we’ve just come to the conclusion of a major investment program, investing close to $200 million in Rwanda to update the soft drink plant in Kicukiro, to add capacity and update the brewery in Gisenyi, and in the east of the country in Ndego to develop a modern irrigated farm to drive our local sourcing program.

As the Coca-Cola bottlers here in Rwanda, we have also invested in a polyethylene terephthalate (PET) plant to produce in Rwanda “pet” bottles. This means that we no longer spend scarce forex on their importation.

In the brewery, we introduced a new line aimed at enhancing our overall capacity and upgrading our utilities. As regards our assets, that is how we’ve prepared for the future. In addition of course each year we invest significantly in the training and development of our people.

Such a high level of investment coming as it does from one of Rwanda’s oldest and largest industries is a strong vote of confidence in the country.

 

How will Bralirwa take advantage of the infrastructure megaprojects Rwanda is undertaking, i.e. power plants, railways, etc.?

In Rwanda, anything that can bring down transport and production costs is most welcome. Even though the government is actively addressing this issue, the cost of power and transportation remains high. That’s an unfortunate result of Rwanda’s location far from a coastline. However, the government has taken a very serious approach in addressing these problems and over the last few years progress has been made.

 

While opening your soft drinks plant in Kigali in 2014, former Prime Minister Pierre Damien Habumuremyi said the plant is testimony of the supportive business environment and the confidence investors have in the country. How would you describe today’s investment environment?

The accessibility of the government is remarkable. If you want to speak to a minister or to senior civil services, it’s easy to do so! In terms of clarity of direction, Vision 2020 provides crystal-clear statement as to direction. That same vision is concisely broken down and explained in the Economic Development and Poverty Reduction Strategy (EDPRS II).

In summary, there’s an admirable ambition, a clarity of purpose, an impatience in delay, and ease of access to decision makers.

 

As Deputy Chairman of the Rwanda Association of Manufacturers (RAM), what are the challenges the industrial sector is still facing?

We’ve covered that a bit above. To repeat and add, ameliorating cost-efficiency, up-scaling power generation, and ensuring a workforce that is well equipped to support and drive the ambition.

Over the last two or three years, the depreciation of the Rwandan franc – not unique to Rwanda in Africa – is a challenge especially given the preponderance of imports within our production costs. A local manufacturing sector is emerging slowly, but it is coming. This implies that the sourcing of manufactured products is from outside Rwanda. We do aim to source raw materials from within Rwanda, hence the investment in the Bramin maize farm. Sourcing a myriad of services is of course from Rwanda.

The history of Bralirwa goes back to 1957, and has been a subsidiary of the Heineken Group since the early 70s. How are you taking advantage of the synergies with Heineken?

The brewery was built in ‘59 and Heineken bought into Bralirwa in ‘73-‘74, about the same time as we became Coca-Cola bottlers. This combination brings advantages.

Being a part of an international company such as Heineken provides us with world-class experience, support and expertise in every function, not to mention access to fabulous brands, in particular the Heineken brand.

It also provides a valued opportunity for our employees, as those who reach the required level of performance can benefit from great opportunities internationally with Heineken. Within the Heineken company you will see several Rwandans in senior management roles. We do present an opportunity for Rwandans to “open their world” if I may borrow Heineken’s tag line.

 

Bralirwa was the first company listed on the Rwanda Stock Exchange (RSE), as from 2011. What have been the milestones achieved since your IPO?

We were listed in January 2011. At the time, the government took the enlightened decision to sell their 20% share of Bralirwa into the market. This allowed international institutional investors to take a stake in the company and in so doing a stake in the successful Rwanda story.

We also have a few thousand Rwandese shareholders. Being a public company places different types of obligations and disclosure requirements that some of our competition does not face, but the listing remains an enlightened choice by both parties.

 

Since 1974, Bralirwa has been producing and selling soft drink brands under a licensing agreement with Coca-Cola. What does this say about the confidence put in Bralirwa and your “passion for quality”?

As I mentioned earlier, we have invested significantly in our soft drinks plant. And have had the honor of receiving the Chairman and CEO of The Coca-Cola Company just last month in Rwanda. With our old line we were able to secure Coca-Cola quality awards. So with the new line, without a doubt these awards will continue to flow! Let’s also recognize that they stand as a testament to our people and our investment.

 

What do you think Bralirwa means for the Rwandese population?

I hope and sense that they have a certain pride in what we all do together.

The fact that we have a staff turnover of less than 1% suggests that people like to work for us, as they apparently tend to stay.

They recognize our contribution not only in terms of corporate social responsibility, but also in terms of environmental protection, farming and educational formation.

Furthermore, our marketing programs are known to create fantastic events and bring real pleasure and excitement to the country. Six years ago, we started Primus Guma-Guma Super Star, a well-known music talent show that we take around the country. We do literally get around 25-35,000 people at each event, of which we have around 10 in this season six. For the final in Kigali, we anticipate around 50,000 people.

To some extent, we have created a sort of music industry related to the show. We have, I believe, invited Rwandans to reconsider their own music. And regionally even neighboring Uganda, Kenya and Tanzania have re-assessed the power of music from Rwanda! It’s such a great story as it is a measure of all sorts of advances in the country.

We contributed to the development of soccer working together with Coca-Cola in the Copa Coca-Cola, which is a schools’ tournament.

And with Turbo King we were part of the initiative to bring the lions back to Akagera National Park in June 2015. It was astonishing to see how this initiative attracted worldwide attention. And the increase in visitors to that wonderful park is now up around 30%.

 

Speaking about being a good citizen, how important is environmental protection for Bralirwa?

Heineken is an international company that takes environmental matters extremely seriously. As does Coca-Cola. So this is in Bralirwa’s DNA also. For example, we have a returnable glass bottle system so that every glass bottle purchased full is returned to us empty for re-filling. We’ve just started the PET plant and we are looking at introducing an efficient recycling operation for plastic bottles. Rwanda is a beautiful and very clean country, and we are determined to help the Rwandan authorities to always keep it that way.

 

What are your efforts to source your raw materials locally and the impact it is having in the country?

We have already mentioned the Bramin farm, a joint venture between Bralirwa and Minimex, the local maize milling company here in Kigali. The farm is in a dry area in Ndego on the southern border of the Akagera National Park. Before, it was an area of few opportunities. Today the farm employs around 50 full time workers and as a lot of our farming is done manually there are days where some 300 casual labor jobs are created. The farm has had quite an impact.

In addition, together with support from the Dutch government, we collaborate with a Belgian NGO, Eucord, on a smallholder project. In the project we work with cooperatives to improve maize yields through extension services, improved inputs, and a focus on reducing post-harvest losses. The Eucord project undoubtedly is beginning to deliver improvements and impact.

We mentioned the challenge of power costs and we are planning a project in Q1 2017 in which we will cover the roofs of the brewery with solar PV cells. The contracting company will own the solar panels, the roofs are clearly Bralirwa’s, and we will then buy the electricity from the contracting party at a rate well below that of the grid and cost of self-generation.

The PV power will then combine with our main-grid electricity and our self-generated power in a hybrid system that is the first of its kind in Africa. We project that this will have quite an appreciable impact on reducing our electricity costs.

 

What investment opportunities do you want to highlight to the international community?

Despite so much going on in the IT and Vision 2020 spaces, Rwanda remains an agro-based economy. What we have done with the farm is to demonstrate that, if you get the right management in the right place together with the right financial support, you can really have impact. As evidence, Howard Buffet seemed persuaded after a visit to Bramin that modern irrigated farming was viable in Ndego. He now is investing in a 2000ha farm in Nyashu, just south of Bramin.

The government does a comprehensive job highlighting opportunities. It’s not for us to make these decisions, but where we see benefit we choose to invest.

 

The company appointed you in 2012 to help it swim through the waves of stiffening beer industry competition and help reshape Bralirwa and consolidate its market position. How would you sum up your four years leading the company?

In terms of investments, the business is ready for the next 20 years! That of course in the short term has a financial impact.

In terms of marketing and commercial operations, we have become more consumer-focused and competitive.

In terms of people, we have addressed our “reversed-demographic” through recruitment in Rwanda and from the diaspora. It’s important to recognize also that the gender balance is much improved across most departments.

I’d say: investment, people, brand choice, competitiveness and local sourcing have been moved on somewhat. And we are ready for the future with Rwanda.



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