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“This industry is not a level playing field”

Tanzanian entrepreneur Leopord Lema, director of Mwanza Quality Wine, tells us about the banana wine industry, the challenges he faces as banana wine processor and how his business is growing.

What is the difference between banana beer and banana wine and what kind of people drink it?
“The flavour is different, the processing method and the percentage of alcohol. Banana wine is exclusively produced from ripe bananas, mixed with water, sugar and wine yeast, while banana beer is made from bananas mixed with water and cereal grains (malt or sorghum). The fermentation process for banana wine takes much longer and gives the wine a longer shelf-life than banana beer. Moreover, banana beer has a content of 5-6% ABV (alcohol by volume) while banana wine is higher in alcohol, 10-15% ABV. However, the target consumers for both wine and beer are mostly low and medium income earners. They cannot always afford to drink grape wines or normal malt beers.”

Do you face competition of locals who produce traditional banana wine?
“Not really, only in a small region (Kagera) in Tanzania they produce their own banana wine according to their tradition. These homemade banana wines have a shelf-life of only 3 days, while the quality of our banana wine stays intact for one year. Moreover, we have the proper machines to produce wine commercially, in large quantities, in contrary to the local village where they only produce wine for their own usage.”

How do you outshine the competition?
“By offering a better taste and quality. You have different categories of banana wines based on their alcohol percentage, that can range from zero to 14 percent. Our wine is called Banana Power for a good reason – our wine has an alcohol percentage of 12%. We also strive to work as efficiently as possible with the least waste of time and effort. That’s why we now have day and night shifts and our trucks are never empty, so if we transport our products we always make sure on the way back the trucks are packed with bananas or empty bottles we collected.”

You are also an active member of the Liquor Association in Tanzania?
“Yes, we represent the interests of the liquor industry in Tanzania. One of the things we do is discuss with the government issues like the new excise duty (tax). This is a duty charged on specific goods and services manufactured locally, like beers, wines and spirits. So, all the banana wine producing companies should pay this tax. However, the reality is that only formal registered companies pay this tax, since the majority of the companies is not registered. This results in unfair competition as we are not playing on a level playing field. I think if the government would decrease this duty (tax), they receive much more money. Not only because companies then have more capital left to invest and grow, but also because a lot of informal businesses would not be afraid to register themselves.”   

What are the main challenges for your company at the moment?
“The rising costs are the biggest challenge at the moment. From the new excise duty (tax) to the increased price of sugar, which is the most expensive ingredient of banana wine. The government also doesn’t allow us to use empty bottles of other brands anymore. Before we used old Heineken bottles and just replaced their label by our own label, but now we have to buy our own (new) bottles, which is costly.”

Will you raise the price of your products now your costs are rising?
“Not right now. Before I made a decision, I first want to watch my competitors and see how  their increased prices effect their sales volumes. Low-income consumers, who buy banana wine, are price sensitive, so I have to be careful. I am also investigating how I can reduce the production costs. One of the options is to buy a machine that automatically wraps bottles in plastic papers, which would replace the more expensive boxes I am using right now. Moreover, I also want to give my customers time to get used to the new bottles I just introduced. Too many changes all in once, can have a negative impact on my business.”  

How did your company grow in the last 4 years and what are your future plans?
“Like with most companies, my business didn’t grow in a straight line up, but is a wave-like pattern with ups and downs. In 2014, when I received the first of three  loans from SME Impact Fund, I bought a blowing machine to blow my own plastic bottles. This gave my business a big boost and  we produced 400.000 bottles of banana wine that year. Unfortunately, the price of sugar increased in 2016, which had a big impact on my business. Luckily in 2017 the government banned alcohol in little sachets such as the popular locally made gin Kongayi. Since banana wine is a substitute for these little sachets of gin, more people started to drink banana wine which really boosted my sales. My business is blooming right now and we produce almost 400.000 bottles of banana wine each month. I already started to build my own factory on a plot of 20,000m2. This plot offers enough space to expand even more in the future and to meet the demands. My goal is to sell 8 million bottles of banana wine per day and to become the biggest producer of banana wine in Tanzania.”    

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