Interview with Richard Adjei, CEO of Kasapreko

Let’s begin with the overall evaluation of the economy in Ghana. Ghana is experiencing stagnant economic growth. How has the Ghanaian beverage and retail market been affected?

As you rightly said the economy in Ghana is a bit slow right now. There are a lot of issues with electricity and water in Ghana. We also have a bit of a currency crisis. Those three issues are affecting industries and manufacturing companies in general. Due to the power issue that we have, we have had to invest a lot more into protecting our machines. We have had to invest in two big generators for standby power. We have also had to invest in a large water tank, it is a huge metal tank that can take about 3 million litres of water so that anytime the water goes off we can rely on that as a backup. We currently import a lot of our raw materials from Europe and South America and sometimes from South Africa as well. We sell in cedis and so anytime the currency depreciates, our expenses go up. Our profit is also in cedis so if we made 10 million last year, and let’s say that was 4 million US dollars, this year if we make the same 10 million cedis it is now only about 2 million US dollars. So that is really affecting our business. A lot of businesses in Ghana have had to close down and sack a lot of employees, making a lot of people unemployed in Ghana.

For exporters, it is always good to have the money a bit down because you can be competitive in the external market.

I agree. That is the other side because we do both exports and imports and local sales. We kind of balance it out a bit; that is the good thing about us. It still hit us as a Ghanaian business. Those are some of the main issues that are affecting the beverage industries. In general, for the beverage industries, other than the fact that the economy is affecting us, there is also a lot of competition right now for our sector. Our sector is known as the mainstream, it is not the top end; we are in the mainstream, middle belt. Now you have the big players coming into the sector. A lot of the international global players are moving into the mainstream in many African countries. Ghana is one that they are targeting a lot. There are also a lot of small companies that are moving into the mainstream business. There are now probably about 15 companies in the industry right now.

Our long term aim is to be a total beverage company.

If the major large players come here and sell directly, it must be very expensive.

No. They have manufacturing here.

Have you seen any changes in the demands for your products since we saw you last?

When you saw us last time, the demand was mainly from Nigeria but now we get demand from South Africa, Ivory Coast and the UK. Those are the three main places we have demand from right now. There is still demand in the US but we are still in the process of formalising trade with the US. There are a lot of people that travel and put it in their bags or in containers to take it there but we are in the process of formalising it. In terms of international sales, obviously we have South Africa, Ivory Coast and the UK.

For what kind of products?

Mostly the bitters products. We also have the lime based products that are doing very well in Ivory Coast, for example. There are a lot of health benefits that come with the lime and lemon drink that we have and a lot of people are patronising that in the West African markets. Another product that is also doing quite well is the VIP, which is an Irish cream. It is in a sachet, so a small bag that we sell and that is doing very well in Ghana and internationally.

You have 15 brands at the moment, and this year you introduced Alomo Silver and Cardinal Strawberry. What are the particularities of these products? How has the market responded?

Alomo Bitter Silver has done quite well since we introduced it. Alomo Bitter Silver is a variant of Alomo Bitter itself. We tried to make it sweeter; it is not as bitter as the Alomo Bitter. We also reduced the alcohol a bit due to the health concerns in the industry. There are people who don’t want too much alcohol in their system so we reduced the alcohol and changed the taste. The Silver version actually has mint in it, not just the mahogany and other ingredients we use, so you also get the health benefits from the mint.

The long term aim is to become a total beverage company. You will be entering the soft drinks market and water. Are there any other products you will be introducing?

As we said last time, our long term aim is to be a total beverage company. This year we are going to be doing our own water, our own soft drinks, our own juices and our own malt drinks. Those are the products that we will be doing within the next 6 months. That is our strategy to becoming a total beverage business. We are still talking to some partners that want to do wine in Ghana, so maybe in the next year or two we will look at that sector as well.

You recently launched two new products in Nigeria which is your biggest export market. What is your strategy for the nearby regional market, beyond what you already mentioned?

When you look at Eastern Africa there is Kenya, Ethiopia and Uganda. We are still in talks with some distributors in those markets. Basically sometimes not every market will accept your product, we are trying to find out which products will be very well accepted in those markets, so that we can produce them here and send them there. That is what we are planning to do with the other markets that we have not entered so far.

What actions are you undertaking to enhance your status as the market leader in bitters?

In terms of our strategy, we are doing a rebranding of our products. We are putting our products into new bottles. We are giving our products a better image and trying to separate ourselves from the competition. That is what we are doing to differentiate ourselves. We still pride ourselves on being the first manufacturers of bitters in this industry so that also differentiates us from the others. Other than that, we are still coming up with different types of bitters, as I said, we just came up with the Silver brand, which is the first mint bitters in the industry in Ghana. In the bitters industry we still try to innovate and come out with other types of bitters to compete in that category.

There is a problem with piracy in Nigeria with regards to counterfeit products. Have you taken some actions to tackle this?

The piracy or counterfeit products in our industry is mainly in Ghana and Nigeria, but almost everywhere you go a lot of people try to fake our products and sell them on the market. We have put a safety seal on the cover of the cap, so this should protect our consumers. On the safety seal, there is a holographic seal which has a lot of security features just like you see on currencies. That means that the counterfeiters will not be able to recreate those security features. This holographic seal is what we tell our customers to look out for when they are buying our products. It has helped us a lot especially in Nigeria. It has given our consumers’ confidence in the brand.

Locally you are working on a new cardboard and plastic factory. Could you tell us about that?

In terms of our strategy going forward, especially because as you know the currency is depreciating in Ghana, we are trying to source most of our raw materials locally. Sometimes our local suppliers cannot meet the quality we need, so we took the step to try to produce some of the raw materials we use in house. We started producing our own plastic caps and closures. We produce for ourselves and we sell to other people that need quality caps. We are in the process of investing about 13 million US dollars in a new factory that will be producing our own paper boxes. We will produce these boxes for our own use as well as sell them to the competition that need paper boxes. We believe ours to be the best quality on the market.

What vision do you have for the company?

Our vision for the company in the next five years is to be the number one beverage company in Ghana. When you put all the soft drinks, beers and spirits together, Kasapreko should be number one in terms of revenue, acceptability and brand awareness. Once you come to Ghana and speak of beverages, we want the first name that anyone tells you about to be Kasapreko. That is our aim.

Right now to mention names there is Coca Cola, Guinness and SABMiller, these are the three main players in the beverage industry. Kasapreko is now the up and coming local company. Most of the beverage industries or the big companies in Ghana are all multinational. We want to be above them in five years.

Is that possible?

It is certainly possible.

Can you tell us about your strategy with regards to partners?

In terms of our growth strategy in business you can’t always do things alone, sometimes you need partners to push you. In our ethanol business even though we use a lot of ethanol, we have a different partner in the ethanol business that we sell ethanol to other companies with. Going globally, there are a lot of countries that we will be going into. We might not always be exporting our products from here directly; there are companies that we are talking to about partnering with to either bottle in South Africa or Nigeria, to produce over there and not always in Ghana. In Ghana there are currently a few big global players in the spirit industry that have approached Kasapreko and we are still in talks with them to see how by partnering we can best grow the company in the future.

You said that there is a lot of competition. How are you tackling that? How do you set yourself apart?

The competition mainly has come from the herbal industries. In Ghana we did the herbal drinks with alcohol and the herbal industries do the herbal creams and soaps etc. Now a lot of them have also started doing drinks. Kasapreko is the biggest player in terms of herbal drinks. We are still working to get our ISO certificate. In terms of machinery and in terms of quality, when you are buying our brand and drinking our drinks you know that you are not just drinking any brand from someone’s garage or front room. We still pride ourselves in terms of quality and we have invested a lot in our factories. We feel consumers have confidence in our brand when they drink our beverages. We have also come up with a lot of other bitters which are superior to the new brands that are coming up. So we are trying to fight competition that way.

In terms of technology are you looking for specific knowhow or technology?

We just invested in SAP for our operations to help us fix our supply chain issues. So now from my computer I can check what is happening in production, in sales, in raw materials etc. We can check from our suppliers when goods have been shipped. This has really helped us integrate a lot of sectors of our business.