‘People don’t mind spending an extra buck for quality,’ says craft beer entrepreneur
Kenyans consumed over 600 million litres of alcohol in 2011, worth an estimated US$2.2 billion according to studies. Competition in Kenya’s alcohol market has heated up with the entry of small local brewers and established foreign brands. Canadian-born and Kenyan-raised Aleem Ladak is the founder and director of The Big Five Breweries Ltd, a craft brewery that produces five brands named after the five big wild animals. Ladak, 35, told How we made it in Africa’s Dinfin Mulupi about the opportunities for microbrewers and the stiff competition the company is facing.
What inspired you to venture into the brewery business?
I am a brewer by profession and I worked for years in Canada, the US and Europe where the concept of craft brewery is quite familiar. Six years ago, the beer market was opening up in East Africa and I decided to come back and do something different. I found a gap in the premium market and that is why I decided to open a craft brewery.
Good beer has to go with good food and entertainment so we also have a fine dining restaurant and a lounge and bar. We opened Brew Bistro & Lounge in December 2009 and we have grown in the last four years. Our production capacity is 1,000 litres a day. We have our own niche market, which is growing as people begin to appreciate the difference between freshly brewed beer as opposed to bottled beer. The draught beer market is still developing in Kenya and we expect it to get even better. I have been brewing for 15 years now and I know draught beer is always better than bottled beer. Initially we were only selling our beer in-house, but now we distribute to 15 outlets in Nairobi. The idea is not to go mainstream. We want to expand the niche market and be in select areas throughout Kenya and the region.
Many beer brands are coming up to challenge the traditional big players. What is driving this change in the industry?
The middle class is growing rapidly. They have disposable income and appreciate the difference in quality. The consumption per person in Kenya is however still a lot lower compared to other countries but it is increasing. We now have more imported brands and small local players, which allows people to be innovative. People don’t mind spending an extra buck for quality.
Describe the challenges you face.
The market is dominated by multinational firms. Even though we are in a niche market, we still have to be price competitive. With smaller companies you don’t have big budgets for advertising and marketing. We have to look at other avenues and channels to market our products. That is why we adopted the concept of having a brewery with a bar and restaurant. This provides customers with the experience and promotes our brand.
Our production costs are high because we have to import all our raw materials. The hospitality industry is also not as lucrative as most people think. If you are not very passionate about the hospitality industry it can be a very difficult and competitive industry to be in. There is a very thin line between failure and success. At the end of the day you rely solely upon your consumer. You have to maintain your standards day in, day out and that is extremely challenging. It is a rapidly changing industry at the same time. In the last five years, the number of restaurants that have opened and closed is huge. It can be very profitable, but it is not as easy as people think it is.
You are one of many young people that have quit employment in the West and moved to Africa to venture into business. What happened to the land of milk and honey in the West?
The African diaspora can feel the potential in Africa. If you look at markets in Europe and North America, they are saturated. It is very difficult to build a successful company. In Africa it is still possible to make a big difference with less investment. I hope that this (the diaspora moving back home) continues, but it will depend on the atmosphere created here and the ease of doing business. Even though it is easier to set up a business now than it was 10 years ago, it is still a lengthy process and it ought to be simplified.
What advice do you have for other aspiring entrepreneurs?
You need to take the risk at some point. You will never know if you will be successful if you never take that step. Kenya and the entire region have a lot of potential right now. It is not going to be easy though. Even for us, three years later it is not easy. But if you are passionate and driven you will make it. When it is your own business and you have the responsibility to take care of 75 employees like we do, no matter the difficulties, you will always find a way to get to the next day. You also need to look ten years ahead. You also need to do your homework and study the market.
Tell us about your future plans.
There is huge potential for draught beer in East Africa. Our plan is to expand within Kenya in the immediate future and later within the region. We are looking for the right location and investment opportunity to set up a bigger manufacturing facility in Nairobi.