Kenya Insights

Tag: East African Breweries Limited (EABL)

  • Court Told How EABL Has Exploited Artists, Influencers in Campaigns

    Court Told How EABL Has Exploited Artists, Influencers in Campaigns

    A bitter legal battle has erupted at the Milimani Law Courts where lawyers representing media personality Willis Raburu have accused East African Breweries Limited of systematically exploiting artists and influencers in its marketing campaigns.

    The allegations emerged during proceedings in which Steizon Limited, a digital communication company owned by Raburu, is suing EABL and its marketing agent Game Changer Marketing Limited for allegedly withholding KSh10 million owed for work delivered during the Furaha City Festival held on December 7, 2024.

    Lawyer Martina Swiga, part of the legal team acting for Steizon alongside Danstan Omari, told the court that the non-payment represents a gross violation of artists’ rights and contractual obligations.

    She described the case as emblematic of a broader pattern where corporate entities engage creative professionals for major campaigns but fail to honour payment agreements.

    According to court documents, Steizon entered into a binding agreement with Game Changer Marketing Limited, which was acting as EABL’s agent, to provide comprehensive promotional and event coordination services for what was marketed as the Wabebe Experience during the festival.

    The scope of work was extensive.

    Steizon claims it delivered influencer engagement, digital promotion, brand visibility enhancement, logistical execution, security collaboration, media coordination and full event management.

    The company says it produced over 60 video reels, more than 100 static posts, and achieved a social media reach exceeding one million users.

    In a sworn statement filed before the High Court in Nairobi, Willis Wayne Raburu, director of Steizon Limited, detailed his personal involvement in the project.

    He said he supervised teams, coordinated artists and influencers, oversaw media production and ensured smooth execution of the event.

    Despite fulfilling all contractual obligations, Raburu told the court, the agreed payment of KSh10 million has never been remitted.

    He said after the event concluded, Steizon was instructed to prepare a detailed report to facilitate payment processing.

    The company complied and submitted the report, only for Game Changer Marketing to allegedly redirect them to another entity rather than settling the outstanding dues.

    The legal team argues that such practices have become disturbingly common in Kenya’s creative industry, where artists and content creators invest significant resources, time and talent into corporate campaigns only to face payment delays or outright refusal to honour agreements.

    Raburu’s lawyers told the court that the failure to pay has caused severe financial strain on Steizon Limited.

    Beyond the immediate monetary loss, they argue the company’s reputation has been tarnished, affecting its ability to secure future contracts and maintain operational stability.

    Steizon is now asking the court to declare the contract binding and enforceable.

    The company wants both Game Changer Marketing Limited and EABL compelled to jointly and severally pay the outstanding KSh10 million. Additionally, Steizon is seeking damages for financial losses suffered and compensation for reputational harm.

    The case has drawn attention to the power imbalance between major corporations and creative professionals in Kenya’s advertising and events industry.

    Legal experts say many artists and influencers work without proper written contracts or legal representation, making them vulnerable to exploitation.

    Industry observers note that while brands readily leverage the reach and influence of content creators to drive sales and brand visibility, payment disputes remain a persistent challenge.

    In many instances, creative professionals lack the resources to pursue legal action against well-funded corporations, leading to a cycle where such practices continue unchecked.

    The lawsuit against EABL, one of Kenya’s most prominent corporate entities, signals a potential shift where artists are increasingly willing to seek legal redress for unpaid work.

    The outcome of this case could set an important precedent for how contractual obligations between brands and creative professionals are enforced in future.

    EABL and Game Changer Marketing Limited had not filed their responses to the suit at the time of going to press.

    The matter is pending before the High Court, with parties expected to appear for directions in the coming weeks.

  • Diageo Eyes EABL Exit as African Divestment Strategy Intensifies

    Diageo Eyes EABL Exit as African Divestment Strategy Intensifies

    Diageo Plc appears to be positioning East African Breweries Limited (EABL) as its next major divestment target, as the British multinational accelerates its retreat from African markets in pursuit of higher returns and reduced volatility.

    The speculation has intensified following Diageo’s announcement of a $500 million cost-cutting programme and asset disposal plan, which chief financial officer Nik Jhangiani described as involving “opportunities for substantial changes” that would go “above and beyond the usual smaller brand disposals.”

    Industry analysts are now pointing to EABL where Diageo holds a commanding 65 percent stake worth approximately Sh100 billion as the most likely candidate for divestment, given the company’s systematic exit strategy from African brewing operations.

    The writing on the wall

    The signs have been mounting for months. Since 2022, Diageo has methodically dismantled its African brewing empire, offloading stakes in Nigeria’s Guinness operation (58.02 percent), Ghana Breweries (80.4 percent), and Seychelles Breweries (100 percent).

    Earlier exits from Ethiopia and Cameroon further underscore the company’s pivot away from the continent’s volatile markets.

    “With Diageo plc leaning towards its rich spirit portfolio globally and its continued exit from beer in Africa, we begin to speculate on a likely strategic exit by the shareholder in EABL in the medium term,” Standard Investment Bank noted in a recent analysis.

    The timing appears particularly strategic. EABL represents Diageo’s last major African brewing asset, and with the continent contributing just nine percent to the parent company’s global net sales, the financial logic of an exit becomes increasingly compelling.

    Standard Investment Bank’s analysis suggests EABL could be significantly undervalued, estimating the subsidiary’s worth at $2.79 billion (Sh360.75 billion)—2.35 times its current market capitalization including debt. This valuation gap could create an attractive exit opportunity for Diageo while offering substantial upside for potential acquirers.

    The irony is stark: just two years ago, Diageo invested Sh22.7 billion to increase its EABL stake from 50.03 percent to 65 percent.

    That investment, which seemed to signal long-term commitment, now appears to have been a strategic consolidation ahead of a potential full exit—maximizing control and value extraction before divestment.

    Market pressures mount

    Diageo’s urgency stems from mounting investor pressure to improve returns amid sluggish global demand for alcoholic beverages.

    The company faces the specter of structural decline that has plagued the tobacco industry, as younger consumers increasingly moderate their drinking habits.

    The $500 million cost-cutting programme aims to generate sustainable annual free cash flow of $3 billion—up from $2.6 billion last year. Divesting capital-intensive brewing operations in volatile markets fits perfectly with this “asset-light” strategy focused on higher-margin spirits.

    EABL’s attractive position

    Despite the speculation, EABL remains an attractive asset.

    The company’s recovery is evident in its recent performance, with net profit rising 19.6 percent to Sh8.1 billion in the six months ended December 2024. EABL shares have gained 8.3 percent year-to-date, reflecting investor confidence in the Kenyan market’s resilience.

    The company’s portfolio includes culturally significant brands like Tusker, which holds deep market penetration in Kenya, alongside international brands like Johnnie Walker scotch whisky that benefit from Diageo’s global distribution network.

    A successful EABL acquisition would require deep-pocketed investors, given the Sh100 billion valuation of Diageo’s stake alone. Potential suitors could include:

    Regional Players: Other multinational beverage companies seeking African exposure, particularly those with established distribution networks in East Africa.

    Private Equity: Firms specializing in consumer goods investments, attracted by EABL’s market position and growth potential in Kenya’s expanding middle class.

    Strategic Investors: Companies seeking to enter the African market through an established platform with strong brand recognition and distribution capabilities.

    Local Consortium: Kenyan investors or institutions seeking to nationalize a key economic asset, though the capital requirements would be substantial.

    An EABL divestment would mark the end of Diageo’s significant African brewing presence, completing a strategic transformation that began with the company’s formation in 1997.

    The move would also test Kenya’s appetite for foreign investment exits in key economic sectors.

    For EABL employees and stakeholders, the speculation creates uncertainty about future strategic direction, investment levels, and brand portfolio management.

    However, the company’s strong market position and recovering financial performance suggest it could thrive under new ownership with adequate investment.

    Market watch

    While Diageo has declined to comment on “market speculation,” the company’s systematic African exit strategy speaks louder than official statements. CFO Jhangiani’s emphasis on “substantial changes” to the portfolio, combined with the established pattern of African divestments, creates a compelling case for EABL’s eventual sale.

    The question is no longer whether Diageo will exit EABL, but when and to whom. With the company’s “asset-light” strategy gaining momentum and investor pressure intensifying, the timeline for a potential transaction may be shorter than many anticipate.

    For now, EABL continues operating as a key contributor to Diageo’s African operations, representing 46 percent of the region’s performance.

    But as the British giant reshapes its global portfolio, Kenya’s flagship brewery may soon find itself under new ownership, marking the end of an era and the beginning of a new chapter in East African brewing.

  • EABL, Diageo’s Subsidiary Accused Of Playing Dirty Tricks Threatening Shutdown Of A Competitor

    EABL, Diageo’s Subsidiary Accused Of Playing Dirty Tricks Threatening Shutdown Of A Competitor

    African Originals, a Nairobi-based startup behind  ‘KO’ brand popular for a range of ciders, iced teas and gins, is battling regulatory hurdles that now threatens its future and now blaming their rivals and a market giant East African Breweries Limited (EABL) for their predicaments.

    In the current edition of Semafor Africa newsletter, pan African online publication, it’s alleged that EABL could be waging dirty wars against African Originals.

    African Originals, a 7-year old startup accuses EABL of copying some of her products and also sponsoring tweets purported to be from customers complaining about health complications after consumption of African Originals’ products.

    In a letter written by the company to EABL, they accuse the market giant of engaging Wowzi, a Nairobi-based  digital marketing company with links to top influencers and that it was this particular company that was used to wage a war online in vital tweets to defame KO.

    EABL is alleged to have engaged the same digital firm that deals with ‘macro-influencers’ to give ‘authenticity’ in other campaigns.

    The company also accuses EABL staff of maligning her products and incentivized supermarkets staff not to display their products.

    “We are ready and willing to compete with EABL on merit through the quality and prices of our products but we are not prepared to suffer serious commercial harm as a result of their smear campaign,” African Originals chairman Henry Rudd wrote in the letter to Diageo’s general counsel in London.

    In the 90s EABL had a bruising turf war with the South African brand Castle Brewery forcing the latter to close her multi million factory at Thika leading to the loss of 800 jobs in 2002.

    In 2019, EABL was involved in bottle war with Keroche Brewery with the later accusing EABL of dirty tactics to entrench monopoly in the country’s brewing industry.