Mauritian Phoenix Beverages has received approval from the Competition Authority of Kenya (CAK), following a review, for its minority acquisition (28.3% equity stake) of African Originals, a company incorporated in the United Kingdom but operates in Kenya through Savannah Brands, which holds its portfolio of alcoholic (cider, gin) and non-alcoholic beverages (iced tea, tonic).
The deal was announced in November last year but was subject to regulatory approval given the turnover of the combined entity would exceed KES 1bn.
*On Sept 7, Food Business Africa reported the company had raised USD 2mn (KES 257.4mn) to facilitate its expansion.
CAK’s review was to determine the impact of the acquisition on the alcoholic (ciders, spirits) and non-alcoholic segments on completion of the deal. The review was based on the vertically-integrated relationship between Kenya’s largest supermarket chain Naivas, in which Phoenix Beverage’s parent company owns a 51% stake, (more on this below) and Savannah Brands, which supplies it.
Savannah Brands’ market share in the ciders segment is growing but is negligible in comparison to more established peers—it grew from 0.003% in 2020 to 1.5% in 2022.
Kenya’s beverage market share in terms of segments.
1. Cider
Source: CAK
2. Spirits
According to CAK, Kenya’s spirit market has a market share of approx. 27% and includes manufacturers such as EABL, Keroche Breweries, ABV, London Distillers, Kenya Distell Group and KWAL. And while the earnings of the alcoholic spirits industry was KES 1.9bn in 2022, Savannah Brands’ market share was less than 1% in 2022. When combined with annual sales from its relationship with Naivas, the value is 12% and does not raise competition concerns.
3. Non-alcoholic ready-to-drink
Often split into carbonated and non-carbonated soft drinks, this market is a mixture of local and international companies.
Source: CAK
Again, Savannah Brands’ market share is very small and is part of the 20% “other” segment shown above. In addition, both parties have stated that Naivas is only responsible for 5% of Savannah Brands’ total annual sales of KO Iced teas and Tonics.
Therefore, based on its analysis of the Kenyan market, CAK reached the decision that the deal does not cause any market competition issues.
IBL’s East African expansion
The acquisition of Savannah Brands can be viewed as part of the company’s East African expansion plan. Pheonix Beverage’s ultimate owner is IBL Holding, a Mauritian conglomerate which has earmarked East Africa as a key region, forming part of its “Beyond Borders” expansion strategy. It made its first foray in the region through its investment in supermarket chain Naivas in 2022 when it acquired a 40% stake alongside its partners from Amethis and development finance institutions. It subsequently bought an additional 11% stake in the company, elevating Naivas from associate status to subsidiary.
IBL Holdings’ interest in African Originals is just one of three acquisitions it has made in the past year. In August 2023, the company bought 51% of the share capital of Make Distribution, a retailer that operates four hypermarkets which trade under “Run Market” in Reunion. Earlier in the same year, it acquired Harleys, a Kenya-headquartered pharmaceutical, medical, OTC products and healthcare service provider with operations in Uganda and Tanzania.