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Keroche Breweries of Kenya Plans Expansion, Bourse Listing

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Keroche Breweries Ltd., a Kenyan beer-maker, is expanding its production capacity by more than 10-fold and plans to list on the local stock exchange in the next five years, Chief Executive Officer Tabitha Karanja said.

The company at the end of March will open a new plant at its location in the central town of Naivasha that will increase its output volume to 110 million liters of beer a year from 10 million liters, Karanja said in an interview. It received a 5-billion shilling ($55-million) loan from Barclays Bank Kenya Ltd. to help finance the work, which Keroche will pay off by 2020 and then the company plans to start trading shares on the Nairobi Securities Exchange, she said on Wednesday.

Kenyan beer drinkers are drawn to Keroche’s products because they are “affordable and natural,” she said.

The brewer wants to increase its market share to 20 percent from 5 percent, said Karanja, making inroads against Diageo Plc’s East African Breweries Ltd., which controls almost the rest of the Kenyan beer market and half the spirits business. The industry is becoming more competitive with Keroche and others companies growing their presence, posing a threat to EABL’s revenue growth even as demand rises for alcoholic drinks, Nairobi-based Kestrel Capital said in 2013.

Beer sales are expected to keep rising because of Kenya’s growing population, increasing levels of wealth and shifts in urban migration amid stiffening competition among drink-makers, according to research company Euromonitor International Plc.

Finding Customers

“With Keroche increasing its capacity by 10-fold we are going to see some jitters in the market as the brewer finds room for its increased capacity,” Eric Musau, a research analyst at Nairobi-based Standard Investment Bank Ltd., said by phone. Keroche has the ability to double its share of the market within the next two years, Musau said.

Keroche’s lager- and malt-beer brand is called Summit, and it also produces a pre-mixed vodka drink, a range of distilled spirits including gin, brandy, whiskey and vodka and it distributes several types of South African wines, said Karanja.

The brewer plans to start supplying its products in shops in neighboring Tanzania and Uganda by the end of this year. EABL already has a regional presence, operating manufacturing plants in Kenya, Tanzania and Uganda and exporting to Rwanda, the Democratic Republic of Congo and South Sudan.

(Updates with details on beer market in fifth paragraph.)
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