British multinational a*******c beverages company, Diageo’s investment in a new Kenya Breweries Limited (KBL) plant in Kisumu constitutes 25 per cent of the total annual capital expenditure, the company’s Managing Director Jane Karuku says.
Speaking when President Uhuru Kenyatta presided over the official ground-breaking of the Kshs15 billion plant, Karuku said the investment follows other capital expenditure investments totaling Sh16 billion in the last five years alone, taking the total investment to over Sh30 billion.
The money has been spent on expanding local raw material sourcing, production, distribution and retail capacity across Kenya.
The new plant will become operational within the next two years.
Karuku said: “It is great news for Kenya’s economy and particularly the people of Kisumu who have been asking when we will return after halting production in 2002. This investment constitutes 25 percent of the total annual capital expenditure for Diageo, our parent company – a resounding statement of confidence with government.”
The ground-breaking ceremony will kick off the installation of the new brewery and refurbishment of the facility set to produce Senator, KBL’s low-end beer.
President Kenyatta lauded KBL’s commitment, saying it will spur the regional and national economy through creation over 1,500 direct jobs, while more will come from the 22,000 new farmers set to benefit from supplying the new brewery with sorghum. Combined with the distribution and retail ends of the value chain, the new plant is expected to employ over 100,000 jobs.
During the function, Karuku said KBL’s strategy focuses on the ‘From Grain to Glass’ value chain which is now projected to double the market for sorghum as a cash crop, from the current 20,000 metric tonnes to around 40,000 in the next five years.
The climate in Nyanza is one of the most conducive for sorghum and millet production and the location of the plant will immensely benefit the local farmers. Gross additional farmer earnings are expected to reach over Kshs 6 billion annually over the next 10 years boosting rural economies.
Senator Keg production is anticipated to increase by one million hectoliters in the first five years of the Kisumu plant operation, while the number of sorghum farmers is projected to grow from the current 30,000 to around 45,000 farmers due to the high demand. As a result, consumption of illicit alcohol is likely to reduce from the current 50 per cent to less than 20 per cent over the next five years.
The Kisumu plant started operations in 1984 but was closed in 2002 due to improvements in beer production technology that helped create excess capacity in beer production at the Nairobi brewery. The re-opening will help plug fresh demand for Senator, a hugely successful beer product launched in 2004, targeted at the low-end of the market.