The water revolution
Jan 21, 2009
In the early 1990’s, the Rwenzori Beverages founder walked into several banks seeking funding for his mineral water business idea. He received a rude welcome. Bankers reminded him that more than half of Uganda’s population then lived on less than a do
By Frank Sserwaniko
In the early 1990’s, the Rwenzori Beverages founder walked into several banks seeking funding for his mineral water business idea. He received a rude welcome. Bankers reminded him that more than half of Uganda’s population then lived on less than a dollar a day. They confronted him with a question: Who will pay half a dollar for just a half litre of water?
It is a question few could answer then, but even fewer can ask today. Rwenzori finally got off a good start in 1993, capturing the up market consumer segment, then the middle class and later the mass market.
Rwenzori is still a household name among bottled water consumers. On its website, the company says it commands about 80% of the local market, with production capacity of 300,000 bottles per day. Some of the water is sold to the regional market – South Sudan, Rwanda, Burundi and DR Congo.
“We have made partnership with top hotels in Uganda, like the Kampala Sheraton Hotel, Hotel Equatoria and Grand Imperial Hotel. We are also the supplier of water to Uganda In-flight Services (U.I.S.), a company that provides water for passengers flying in and out of Uganda,†the information on the website indicates.
However, with the water business seen to be profitable, the future will not be a bed of roses for the pioneer company that once had a 100% market. A total of 13 competitors have emerged over the last five years, eating into its territory.
NC Beverages, whose Highland Pure Natural Mineral Water brand has consistently gained popularity over the recent years - especially because they retail a 600ml bottle at the same price as Rwenzori’s 500ml unit - are presenting the toughest competition.
To survive at the top, Rwenzori is reported to be negotiating a takeover deal with South Africa’s SABMiller, the owners of Uganda’s Nile Breweries. While sources last week hinted that the company’s top managers were in South Africa negotiating the final deal, SABMiller remained tight lipped.
“The position is still as our managing director stated earlier,†Onapito Ekomoloit, the Nile Breweries Corporate Affairs Director, said, without giving further details. Nile Breweries Managing Director Nick Jenkinson had in an earlier report dismissed the deal prospects as mere ‘rumours’ but Rwenzori General Manager, Ahmed Pwanjwani, confirmed the development, saying SABMiller had contacted them.
If such a deal were made, increased capitalisation would enable Rwenzori invest more in product improvement and brand marketing, both of which are vital to counter the onslaught of new players.
Of the latest industry entrants, Shumuk Springs says they will produce 3,000 bottles a day targeting the export market. The Shumuk Group chief executive, Shukla Mukesh, said they had invested over sh2b in the plant that churns out mineral water in 300ml and 600ml bottles.
“We intend to export 80% of the water to Sudan and the Democratic Republic of Congo, which have opened their market to Uganda, as well as to the entire region,†Mukesh said.
Wavah Water has already made inroads into the local market with its unique round neck bottle standing out in the crowd. Wavah also produces sparkling water and was the first to introduce the smaller 300ml bottles that retails at sh300.
Other water brands that cannot be missed in the retail fridges are; ‘Hema’ made by Hema Beverages, ‘Refresh’ by Britania Industries, ‘Riham’ by Riham Industries, ‘Rain Drop’ by Vin View International Limited, ‘Ripples’ by Victoria Beverages, ‘Azur’ by House of Eden and ‘Aqua Coolers.’
Soft drink giant Pepsi has also jumped into the fray with its 600ml ‘Peak’ brand steadily gaining popularity, while Century Bottling Company - makers of Coca Cola products - is using its versatile distribution network and brand following to popularise ‘Dasani’ water made from its Tanzanian factory.
Alex Macharia the company’s marketing manager said, although Dasani has been in Uganda since 2006, the company would now go head-on against other brands to promote it in the market. Macharia said the move is in line with the company’s continuous effort to provide variety and exceed customer expectations. But industry analysts say reality seems to have dawned on the beverage giant that consumption trends were fast changing in favour of water.
“It seems more people are learning the importance of drinking water. Besides, people, especially in urban areas, are conscious of the amount of sugary drinks they take,†said Justin Ojangole, a Kampala based marketing consultant.
However, the growth of the drinking water demand has also attracted substandard products and counterfeits into the market. In downtown Kampala and suburbs, there are water brands such as ‘Vanilla Water’ packaged in polythene material. It retails at sh100 and retailers in the Kampala Old Taxi Park say it sells out quickly.
Reports of unsafe water being repackaged in already used mineral water bottles and sold as original are also common. Dr. Abdul Ndifuna the head of the certification division at the Uganda National Bureau of Standards warns consumers to look out for the UNBS quality mark, proper bottling and seals before buying or consuming water.
“Kaveera water is not certified by UNBS. Besides, packaging of water in Kaveera has been found to be unsafe since it gets contaminated after some time,†he explains. He says there are 13 certified water-bottling companies in Uganda and one imported brand, Dasani, whose products the standards agency constantly monitors.
“Every three months, we take samples from the market and analyse them in our laboratory. We insist on corrective measures where necessary and this also forms the basis for renewing their annual permits,†Ndifuna said in an interview.
To certify a water manufacturer, he explains, UNBS inspects their premises, tests various product samples, and ascertains the health of the staff handling the production process.
In the early 1990’s, the Rwenzori Beverages founder walked into several banks seeking funding for his mineral water business idea. He received a rude welcome. Bankers reminded him that more than half of Uganda’s population then lived on less than a dollar a day. They confronted him with a question: Who will pay half a dollar for just a half litre of water?
It is a question few could answer then, but even fewer can ask today. Rwenzori finally got off a good start in 1993, capturing the up market consumer segment, then the middle class and later the mass market.
Rwenzori is still a household name among bottled water consumers. On its website, the company says it commands about 80% of the local market, with production capacity of 300,000 bottles per day. Some of the water is sold to the regional market – South Sudan, Rwanda, Burundi and DR Congo.
“We have made partnership with top hotels in Uganda, like the Kampala Sheraton Hotel, Hotel Equatoria and Grand Imperial Hotel. We are also the supplier of water to Uganda In-flight Services (U.I.S.), a company that provides water for passengers flying in and out of Uganda,†the information on the website indicates.
However, with the water business seen to be profitable, the future will not be a bed of roses for the pioneer company that once had a 100% market. A total of 13 competitors have emerged over the last five years, eating into its territory.
NC Beverages, whose Highland Pure Natural Mineral Water brand has consistently gained popularity over the recent years - especially because they retail a 600ml bottle at the same price as Rwenzori’s 500ml unit - are presenting the toughest competition.
To survive at the top, Rwenzori is reported to be negotiating a takeover deal with South Africa’s SABMiller, the owners of Uganda’s Nile Breweries. While sources last week hinted that the company’s top managers were in South Africa negotiating the final deal, SABMiller remained tight lipped.
“The position is still as our managing director stated earlier,†Onapito Ekomoloit, the Nile Breweries Corporate Affairs Director, said, without giving further details. Nile Breweries Managing Director Nick Jenkinson had in an earlier report dismissed the deal prospects as mere ‘rumours’ but Rwenzori General Manager, Ahmed Pwanjwani, confirmed the development, saying SABMiller had contacted them.
If such a deal were made, increased capitalisation would enable Rwenzori invest more in product improvement and brand marketing, both of which are vital to counter the onslaught of new players.
Of the latest industry entrants, Shumuk Springs says they will produce 3,000 bottles a day targeting the export market. The Shumuk Group chief executive, Shukla Mukesh, said they had invested over sh2b in the plant that churns out mineral water in 300ml and 600ml bottles.
“We intend to export 80% of the water to Sudan and the Democratic Republic of Congo, which have opened their market to Uganda, as well as to the entire region,†Mukesh said.
Wavah Water has already made inroads into the local market with its unique round neck bottle standing out in the crowd. Wavah also produces sparkling water and was the first to introduce the smaller 300ml bottles that retails at sh300.
Other water brands that cannot be missed in the retail fridges are; ‘Hema’ made by Hema Beverages, ‘Refresh’ by Britania Industries, ‘Riham’ by Riham Industries, ‘Rain Drop’ by Vin View International Limited, ‘Ripples’ by Victoria Beverages, ‘Azur’ by House of Eden and ‘Aqua Coolers.’
Soft drink giant Pepsi has also jumped into the fray with its 600ml ‘Peak’ brand steadily gaining popularity, while Century Bottling Company - makers of Coca Cola products - is using its versatile distribution network and brand following to popularise ‘Dasani’ water made from its Tanzanian factory.
Alex Macharia the company’s marketing manager said, although Dasani has been in Uganda since 2006, the company would now go head-on against other brands to promote it in the market. Macharia said the move is in line with the company’s continuous effort to provide variety and exceed customer expectations. But industry analysts say reality seems to have dawned on the beverage giant that consumption trends were fast changing in favour of water.
“It seems more people are learning the importance of drinking water. Besides, people, especially in urban areas, are conscious of the amount of sugary drinks they take,†said Justin Ojangole, a Kampala based marketing consultant.
However, the growth of the drinking water demand has also attracted substandard products and counterfeits into the market. In downtown Kampala and suburbs, there are water brands such as ‘Vanilla Water’ packaged in polythene material. It retails at sh100 and retailers in the Kampala Old Taxi Park say it sells out quickly.
Reports of unsafe water being repackaged in already used mineral water bottles and sold as original are also common. Dr. Abdul Ndifuna the head of the certification division at the Uganda National Bureau of Standards warns consumers to look out for the UNBS quality mark, proper bottling and seals before buying or consuming water.
“Kaveera water is not certified by UNBS. Besides, packaging of water in Kaveera has been found to be unsafe since it gets contaminated after some time,†he explains. He says there are 13 certified water-bottling companies in Uganda and one imported brand, Dasani, whose products the standards agency constantly monitors.
“Every three months, we take samples from the market and analyse them in our laboratory. We insist on corrective measures where necessary and this also forms the basis for renewing their annual permits,†Ndifuna said in an interview.
To certify a water manufacturer, he explains, UNBS inspects their premises, tests various product samples, and ascertains the health of the staff handling the production process.