Corporate social innovation in East African Breweries Ltd (EABL): Senator keg (B)

The June 14th 2004 meeting between Gerald Mahinda, EABL group managing director and his counterparts James Musyoki, Kenya Breweries Ltd (KBL) general manager, Ken Kariuki, EABL director of corporate affairs and Lemmy Mutahi, EABL marketing manager for emerging brands decided to continue with the Senator project. In concluding the meeting, Gerald was quite emphatic and very precise to the three colleagues: 'Do what it takes to profitably run the Senator business and compete head-on with the illicit brews. If necessary, position Senator differently from other EABL products. In this way there will be a win-win-win-win situation for all the parties - EABL, Diageo, government of Kenya and the Senator patrons'. The options before EABL team led by Lemmy reporting to Gerald was to modify the product, pricing strategy, packaging, marketing and distribution channels while negotiating with the government for tax concessions to make senator project not only socially but also economically viable. An interdepartmental team headed by Lemmy relaunched Senator as Senator Keg in November 2004 priced at KShs20 (US$0.26) per 300ml. This was after the government through Kenya Revenue Authority (KRA) and the Kenyan cabinet in August 2004 agreed to a 30% concession on excise duty on senator. The market uptake was unprecedented with volumes rising to make Senator Keg most widely consumed product of EABL by 2009. However, Senator's profitability remained way below that of EABL premium beer brands like Tusker and Pilsner, (for EABL's other brands see Exhibit 1). A major concern was that in late November 2009, the Kenyan parliament was to debate a bill to legalize traditional and illicit brews. While preparing his 2009 end of year Senator Report, Lemmy had to figure out whether the bill was a threat to Senator or it provided EABL with yet another opportunity for growth and profitability.