YOUNG INVESTOR MAHMOOD SOMANI EXPANDS WATER BOTTLING COMPANY

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Category: Business Published on 22 November 2011 Hits: 329 UGANDA: Expanding market stirs up water business competition

UGANDA. When a young investor of Indian origin decided to start a water bottling company called Rwenzori Beverages, his own family reportedly laughed off his request for a loan to kick-start his business. The banks were apparently not any understanding either, with many of them asking who would buy merely “packaged water” in a country where one could easily go to any home and ask for it.

Nonetheless, Mahmood Somani persisted with his dream and managed to get it off the ground in 1993. With a unique marketing strategy that turned drinking bottled “mineral water” into a status symbol, the company quickly grew in leaps and bounds. By the time Somani cashed in his chips in early 2010, selling the company to beer giant SABMiller, he reaped a reported $18 million.

If imitation is the sincerest form of flattery, then the entry of at least two dozen companies into the water bottling business within a little over 15 years after the launch of Rwenzori provided a crucial pointer to the continuously growing market for bottled water not just in Uganda but across at least five neighbouring countries.

The five countries are Tanzania, Rwanda, Burundi, South Sudan and the Democratic Republic of Congo, with some companies saying DR Congo could in the near-future become an even bigger market than South Sudan currently is. As local and foreign markets grow, one of the latest entrants into the water bottling sector is Vero Foods Ltd.

The new company is owned by local investors led by Emmanuel Katongole, who is more renowned as one of the brains behind ARV manufacturing firm Quality Chemicals.

So what would draw an investor like Katongole into what already seems like a crowded sector?

Mr Katongole was not around to respond to that question, as he was reportedly out of the country. However, the General Manager of Vero Foods Ltd, Robert Ssemakula, said the studies they had carried out returned positive information. “We analysed the market and the players who were in the market when we entered did not have the capacity to satisfy the growing demand for water,” he said.

Vero Foods Ltd launched their products on May 6 this year and, according to Mr Ssemakula, their sales have steadily tripled with every passing month since then. The company introduced a 0.3 litre bottle, which is now the smallest and most handy bottle in the Ugandan market, to create an altogether new market segment.

In total, 27 water bottling companies had been certified by the Uganda National Bureau of Standards (UNBS) by the end of September 2011. The UNBS Quality Assurance Manager, Gyaviira Musoke, also told Prosper that the standards body is currently processing the certification applications of another 10 companies.

The influx of water bottling companies on the Uganda market has however brought with it a series of attendant challenges, mainly stemming from the stiffer competition. Chief executives of some of the leading water bottling companies complained that due to the intensity of competition, some firms were engaging in unscrupulous practices.

During an interview at his company headquarters in Namanve, the managing director of Rwenzori Bottling Company, Kirowi Suma, for instance argued that some of the companies were flooding the market with sub-standard products.

“If you have people who are not adhering to the standards, definitely they bring in water which is not up to the standards,” he explained. “The water produced below the standards is sold cheaply and people will usually go for the cheap water without knowing about the quality and the hygiene.”

Mr Suma, who doubles as the vice chairman of the Uganda Water Bottling Companies Association, wondered whether UNBS has the requisite capacity to monitor the operations of all players in the sector.
UNBS official Musoke however said in a separate interview that the water sector is one of those that the standards body is confident it is monitoring well.

He showed Prosper a set of standard requirements that each water bottling company must fulfill periodically in order to receive and maintain its certification licence.

Somani also a successful high-tech entrepreneur has other business interests which include Clothing Companies, Digital Software Solutions for the Online Gaming Industry, land based casinos in Europe and on cruise ships in the Baltic sea and in the Mediterranean, restaurants and bottled water companies in Europe and Asia, and private label clothing factories in China. Somani now lives in Vancouver, Canada and those close to him say he never talks about his success, and is a humble and approachable person who loves to share his extensive knowledge with others.

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