Happy Ending Ahead? Jeyfine Wines’ founder sees brighter future despite challenges
In fact earlier in the year the Kenyan Government announced it would increase taxes on liquor products, something that industry players vehemently opposed. Alcoholic beverage makers in June opposed the 15 percent increase in excise duty on wines and spirits in this year’s budget, saying it is detrimental to the industry’s growth and will hurt the fight against illicit brews in the country. The Alcoholic Beverages Association of Kenya (ABAK) said in a statement that such arbitrary tax hikes leave legitimate players in the industry facing uncertainty in their investments and business planning.
By Steve Umidha
Business environment has been rattled for months by the unending tag-of-war between the Senate and National Parliament. Headlines of late have bemoaned how supremacy battle between the two, if not worse, could hurt the economy in the long run if left unrestrained.
Yet one company founder of a fast-growing wines and spirits distribution, Jeyfine Wines, Joseph Kingori isn’t worried about an unhappy ending.
“I’m quite confident about the situation, having been in business for over ten years now, that there’ll be a good outcome for everyone,” said Kingori recently during a brief sit-down with Financial Fortune.
Kingori is perhaps qualified to have an opinion. Jeyfine Wines has over the last five years successfully waded through the country’s stringent regulatory thicket as well as high taxation regime to profit from the country’s growing liquor industry.
And the company has the numbers and figures to back that up. Jeyfine Wines, according to its recent earnings, recorded a revenue growth of Sh955 million during the fiscal year ended June 2017 (FY2016), which is an increase of 35 per cent compared to what the liquor firm made in 2015.
Its operating profit rose to Sh275 million during FY2016, a jump of 55 per cent over FY2015 – while net profit was Sh7 million in FY2016, an increase of 55 per cent over FY2015.
Today, there are hundreds of such businesses run in this country facing the above-mentioned challenges plus more – and whose survival hangs in limbo.
It is because of this, Mr. Kingori is now crying foul of the high taxation the country is imposing on businesses and individuals to run its affairs at the expense of company owners.
“It is crazy. For instance we pay on average about Sh2million annually on licensing alone, we are also facing unfair competition from foreign firms operating in a similar environment,” he says.
He however concedes a solution may be found sooner rather than later if the government paid keen attention to what is ailing businesses while at the same time wrestle the roaring scion.
His optimism is perhaps built on how he humbly began this journey some ten years ago, when he started out at a dingy restaurant in Nairobi Central Business District (CBD) in 2009 with an initial capital of about Sh350,000 at a time when counterfeit was order of the day.
“It was tough starting out then. I faced dozens of difficulties particularly when handling and distributing local brands whose rate of counterfeiting was very high,” he opens up, adding that such challenges pushed him out of business and two years later (2011), pulling out, and eventually leaving out a trustee owing to a nasty legal tussle that had ensued.
According to Kingori – a happy-go strong-willed serial entrepreneur, that experience did not deter him from going back into a business venture he so adore. And in 2012, he bounced back this time with a different strategy and enough bucks to back it up.
With additional Sh0.5billion at his disposal, the stern-looking Kingori embarked on a different business model, albeit in the same line of business – with the main focus on premium brands or foreign varieties.
According to him, this was also a period regulations were beginning to kick in owing to private players in the industry who were not compliant at the time and with proper structures to guide the market. Upon the entry of such strict measures, he says this opened doors for opportunities and a year later (2013) he says the company experienced exponential growth of in excess Sh400, 000, and since then, he says “I have never looked back.”
Currently the firm services a market universe of over 2,500 bars in the capital city Nairobi, majority which stock premium brands with over 1,500 outlets buying premium whisky products on a regular basis. This is in addition to a mobile commerce platform Mo-Bar, a direct-to-consumer mobile platform available for download on both Android and Apple smart phones.
It brags of immense experience and brand visibility not only in Nairobi but across the region and presently dispensing nearly all global brands of whiskies, wines and spirits under its belt.
Jeyfine Wines recently bagged a distributorship deal Edrington, the makers of The Macallan Whisky. Macallan is a Luxury Single Malt Scotch Whisky, ranked the number 1, Malt Whisky in value globally. The Macallan has been distributed and is available in most premium outlets in Kenya since 2012.
It is a deal Jackline Mburu, the Area Manager for East Africa & Indian Ocean Countries, Edrington the whisky brand that is The Macallan, she hopes it will be the leading single malt whisky by value in Kenya by 2025 that is expected to take advantage of the growing interest by the Kenyan consumer, in luxury brands.
“In Kenya whisky embodies the aspiration and status of the emerging young and sophisticated consumer with a keen eye and access to luxurious experiences. With improved accessibility to global brands consumption has improved considerably and we expect the category to continue experiencing steady growth,” commented Ms. Mburu.
Kingori now has one big vision that he hopes comes to fruition, which is to produce a Kenyan premium whisky brand in the coming years. “We are working on this, we are still studying the market and soon this will be a reality,” he concludes.
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