Kenya has long been hailed, positively to some, negatively to others, as a drinking nation. Indeed, one peek into our famed entertainment spots over the December holidays will convince even the most hardened cynic that Kenyans are a people who know how to have a good time. It stands to reason, therefore, that a logistics firm seeking to invest in a new niche would do well to jump head first into the guaranteed gold mine that is transportation of alcoholic beverages, doesn’t it? As tempting as that may seem, we would advise you to slow down and take off the beer goggles. An inspection of current events in Kenya’s once booming alcohol sector would slowly reveal that all is not as rosy as it seems from the outside.
It was recently revealed that alcoholic beverage giant East Africa Breweries Limited (EABL) has slowed down operations to producing liquor just five days a week in an unprecedented slump reflecting the slowest first half sales growth rate in four years. This downturn is attributable to the slump in sales of top product Senator keg, which came under heavy government taxation that led to a 67% spike in price. Needless to say, sales took an immediate hit following the price hike, with low demand forcing the company to scale down production to avoid incurring losses.
For the logistics industry, and fans of low cost beer, this is a nightmare scenario. Companies dealing with freighting of EABL products have quickly found themselves rendered redundant, an unfortunate situation that trickles down to devastate smaller scale logistics outfits that make their livelihood by transporting stock from larger depots into smaller scale establishments. Similarly, companies related to the logistics industry find themselves at a loss. These include firms dealing with maintenance and repair of freighting vehicles or importing of replacement car parts and other such peripheral functions.
The alcoholic beverages industry also suffered another upheaval with the implementation of alcoblow testing on our roads. While we in the logistics industry commend any efforts taken to make Kenyan roads safer for our freighting personnel and cargo, not everyone was in agreement about the benefits of breathalyser use. To this end, one brave motorist, Richard Ogendo, moved to court to challenge the alcoblow implementation on the grounds that it is against the constitution both in principle and in the manner of execution, where motorists are often unceremoniously bundled out of their cars with no regard to gender.
While High Court judge Mumbi Ngugi refused to order the immediate suspension of breathalyser use, the matter has been certified as urgent and referred to Attorney General and National Transport and Safety Authority for a decision set to be announced this week. The implications of this ruling on the logistics industry cannot be ignored. We applaud the effort to reduce road accidents caused by drunk driving, both as humans and as business people with interest in protecting our investments, we must also consider the allegations of improper administration of these tests. Allegations abound of motorists unfairly accused, mistreated or otherwise harmed and inconvenienced in the process of receiving breathalyser tests. While there currently exists no proof of these alleged misdeeds, it is in our interest to champion the cause that protects our employees from undue harassment as they carry out their road transportation duties.
On the subject of keeping within the law, supply chain players participating in freighting alcoholic beverages must now be careful to acquire proper documentation permitting them to engage in transporting such cargo, in accordance with the famed Mututho laws. Implemented late last year and collectively loathed by the entertainment sector, the Mututho laws provide a strict framework governing alcohol transport which all supply chain managers involved in this industry would do well to familiarize themselves with. The logistics industry as a whole must brace ourselves for further changes on the same, which may include the formation of a specialized task force to enforce them as the Naivasha legislator has expressed concerns that the Kenyan police force may be too mired in corruption to properly execute the laws.
All in all, it can be argued that 2014 is not the best time to make the leap and invest in alcoholic beverage logistics. If the grass seems greener on this side, it’s because it’s watered by our tears. We as supply chain managers involved in various facets of the process now have no recourse but to stay vigilant, operate within the new found laws and keep our fingers crossed for a change for the better, even as we seek to diversify our specialized skills. Do have a hopeful week, won’t you?