Introduction

CASE STUDY KASAPREKO COMPANY LIMITED

Kasapreko Company Ltd. is one of Ghanas premier beverage distributors. It was the first Ghanaian-owned beverage manufacturer with more than 600 employees. Building off the success of products such as Alomo Bitters and Kasapreko Gin. The company has developed both locally and internationally, generating approximately $70m in revenue. Kasapreko distributes its brands throughout the West Africa sub region with a strong network of local distributors.

Investment and tax climate

Increased inflation and devaluation of the Ghanaian cedi since late 2013 has dampened Ghanas earlier macroeconomic success story. Ghanas power sector, especially on the distribution side, remains one of the biggest factors negatively affecting the economy. In 2015, the government signed a three-year disk $918 million extended credit facility agreement with the International Monetary Fund (IMF) in an effort to stabilize Ghana's struggling economy. Under the IMF program, inflation has declined but the economic situation remains difficult, with a fiscal

deficit of at least nine percent and a debt-to-GDP ratio of 73 percent in 2016.

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Ghana will likely seek an extension of the IMF program as the new government works to renegotiate targets to ensure long term economic success.

Multiple factors are hindering foreign direct investment. Among the major ones are burdensome bureaucracy, weak productivity, costly and difficult financial services, underdeveloped infrastructure, ambiguous property laws, unreliable power and

water supply, and an unskilled labour force. Despite these challenges, Ghana's abundant raw materials (gold, cocoa, and oil/gas), good governance, political stability, and policy reforms make it stand out as one of the better locations for investment in sub-Saharan Africa.

Among the most promising sectors are agribusiness, food processing, textiles and apparel, downstream oil, gas, and mineral processing, as well as the energy, especially renewable energy, and mining-related service subsectors.

Business Case

Kasapreko Company Limited: From gold to beverages Dr. Kwabena Adjei founded Kasapreko in 1989 in his garage in Nungua, a suburb of Accra, and started with 5 people. He did not have a passion for beverages, but he had the right sense of business opportunities. The alcohol business was a niche in the 1980s in Ghana, and

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Nungua was the hub of gin making. Dr. Adjei was initially into the gold business but due to competition and threats, he gave it up and ventured into the beverage

(alcohol) business to bridge a gap in the market.

Although Gin had been the biggest and most popular product in the brewery business, most breweries were just not interested in standardised packaging. Most breweries made use of varied packaging at different points in time, making identification of their products difficult without their logo. Contrary to his competitors, Dr. Adjei decided to pursue a differentiation

strategy. He introduced a new flavor which he sourced from London and standardised his bottle sizes. Customers started to recognize his products as a serious brand and the company received increased attention. Dr. Adjei also started to standardise his packaging boxes, but the production of these was still manual. A few more flavours were added, and many failed, leaving only a few that survived in the long-term. The growing demand for quality alcoholic beverages had to be met

and Kasapreko was at the right place at the right time. Kasaprekos Gin was the foundation of the company since Gin dominated a major share of the alcohol market in Ghana for a long time. People used gin for a variety of things in terms of consumption, including traditional rites. Although Kasaprekos Dry Gin was the groundbreaker for the firms success, Alomo Bitters has become the flagship and

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highest selling product of the company. Consumers' love for Bitters made Kasapreko venture into the Bitters market and eventually commercialized its production.

The birth of Alomo Bitters as a product is unique. In his passion to give consumers the best Bitters, Dr. Adjei met with the Centre for Scientific Research into Plant Medicine in Mampong Akuapem in the early 1990s. The Centre produced herbal medicines and the idea was to combine herbal medicine with alcohol. After three years, their collaborative research emerged and led to the development of herb related alcoholic bitters that cured various diseases - Alomo Bitters. One of its main unique selling points was its aphrodisiac properties.

Business Model: Creating a unique African brand

In 2018, Alomo bitters was twenty years on the market. The bitters were the first commercialized herbal drink from Ghana. Some businesses have tried to emulate both the business model and the bitters flavor, nevertheless, they failed. So, what makes Kasaprekos business model outstanding?

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Key Success Factors of Kasapreko

Quality

...is our hallmark, we ensure that we are serving the right grade of products. We take the whole processes very seriously, from input through production to storage.

Consistency

...ensuring that we invest in the right machinery and technology to be able to offer constant and consistent production.

Variety

Ability to produce new SKUs to soothe our consumers needs and tastes. e.g., lime cordial mixer, K2O whisky (first whisky in a sachet to be produced and sold in Ghana).

Affordability and accessibility

Ensuring that our products are affordable to our consumers through building good relationships with distributors nationwide and ensuring that the products are available in all parts of the

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Country Loyalty

Remaining loyal to Ghanaians is our main success factor. That is what inspired the setting up of this business. In the 80s there was a demand for spirit products. Dr. Kwabena Adjei wanted to produce something affordable but of high quality as to meet the needs and demands of Ghanaians.

Competition has not been successful at reaching Kasaprekos high-end reputation, because we believe they have missed our mark of quality products and pricing, Kwofie says. Instead, Kasapreko offers both alcoholic and non-alcoholic beverages across a range of more than 10 different product categories.

The company has six leading brands in terms of volume: Alomo, K20 Whisky, Kasapreko Gin, Lime Cordial, Tonic Wine, and Carnival Strawberry Liquor.

Alomo bitters is the flagship brand and provides the growth the business needs, however, the perpetuation of the companys differentiation strategy into the non- alcoholic beverage segment is also putting the company in a more favourable position against competition.

In 2015, Kasapreko ventured into Carbonated Soft Drinks (CSD) and added product lines such as Royal Cola, Royal Apple, Royal Orange, and Lemon Lime. Royal Cola is marketed as an affordable and high-quality alternative to Coca Cola with inputs that are sourced from Germany. Kasaprekos most recent product

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innovation is Choco Malt a malt drink with chocolate flavor which is the first of its kind in the Ghanaian market.

Kasapreko segments customers by product category, market trends, and pricing. The companys products are mainly targeted at consumers who engage in hard manual or industrial work.

Currently, about 80% of Kasaprekos customers are males, although variants of Alomo were introduced to attract other consumers that did not enjoy the bitter taste of the classic Alomo drink. Carnival, for example, is the prime product for female

consumers in Ghana. Tonic wine also picked up quite well among other clientele in Ghana.

Challenges

Kasapreko faces the challenge of keeping up with the changing taste of the youth. The company thus introduced Opeimu and three variants of its flagship Alomo brand to attract a younger clientele that does not like the very bitter taste, high levels of alcohol or that is simply more adventurous: Alomo Black has almond extracts infused in it and presents a unique aroma, Alomo Silver has lower alcohol levels (35%) and is less bitter, and finally Alomo Gold has fruity extracts which makes it

a little sweet and has lower alcohol levels (30%) as well. Although the oldest of these

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variants, Alomo Silver, is only about a year and a half on the market, it is doing well in terms of volume. Kasaprekos brands are unique and stand for high quality.

However, appealing to different age groups, gender, and taste preferences requires effective positioning and tailored marketing strategies. Kasapreko aims to follow the footsteps of global African spirit brands such as Amarula or Savanna Dry from South Africa and underwent an expensive rebranding that was carried out by a South African agency. The marketing strategy for Kasaprekos younger brands is driven by the aphrodisiac benefits of the drinks, whereas Alomo is rather marketed as a mature and serious brand. Kasapreko advertises on regional media channels like DSTV, partners with various embassies in Ghana to sponsor their events and is even active in talks on the radio about health risks of consuming low-quality beverages.

This is how we want to tell our story, coming from Ghana. Alomo is a brand that you can enjoy at social gatherings like all other alcoholic beverages. However, this one comes with added value in the form of the herbal extract.

Sales

The companys salesforce is divided by country regions and territory distribution executives who monitor trends of distribution. In Ghana, about 60 local distributors are spread across the regions, 8 to 10 alone in Accra. Except for key accounts such

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as hotels or supermarkets, Kasapreko distributes only through exclusive partner distributors. It has several sister companies that are producing carton packaging, harvesting extracts for herbal concentrates, or generating ethanol from cassava.

Despite a subsidiary companys ethanol production, Kasapreko supplements its supply mainly by imports to meet the high demand.

Outlook

What will be the next big growth opportunity for Kasapreko? The growing consciousness for health is one of the strong trends Kasapreko is planning to look into in the future. The firm has several beverages in the pipeline that are specifically targeting this type of consumers. Kasapreko will also strengthen its presence in the United States of America and expand its international footprint even further. Its strong international sales activity has proven advantageous to withstanding local

competition. African communities overseas will play a major role here as market entry points.

Other key milestones for the next 5 years will be to improve the firms position in the non-alcoholic market, to decrease the cost of production, and to become a packaging house for other brands. Kasapreko has already started packaging for

Nestl, Orijin, Adonko, Special Ice, and Frytols in Ghana.

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Lastly, giving back to society has been an important concern for the company. Kasapreko is already involved in charity projects for water production and education. More recently, the firm has focused on health issues and supported the national Cardiothoracic Centre financially in its operations.

END OF CASE STUDY

Note: Use the case to answer all the four (4) questions below. Submit your answers

through the ERP of the University in a PDF format.

Questions 1:

Explain with reasons, the marketing concept(s) Kasapreko is using. (10 Marks)

Questions 2:

From the case, give analysis of the situation facing Kasapreko in the beverage industry. (20 Marks).

Question 3:

i. Describe the market Kasapreko is targeting. (5 Marks)

ii. How can Kasapreko competitively position itself in the new markets it is

envisaging to target? (10 Marks)

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Question 4:

With the use of Boston Consulting Groups (BCG) Growth Share Matrix, advise Kasapreko on the right strategic options for four (4) of its products. (25 Marks)

END

Answers needed urgently