Eveready confirms end of partnership deal with Energizer

Jackson Mutua

Yearlong talks over a distribution contract between Eveready East Africa and American dry cell manufacturer Energizer, have fallen apart with the two parties opting to walk out of their 49 year relationship.

Eveready has launched its own line of dry cell batteries debuting as Turbo, which will rival Energizer in the market.

“We will start selling our products with the Turbo brand starting now and we have more selling units to take care of our consumer needs. We have entered into partnership with global manufacturer to bring a product that meets energizer quality,” explained Eveready Managing Director Jackson Mutua.

Mutua said the latest move will help the company spruce up earnings by 20 to 60 per cent since they will source the product directly and cut out brokers.

Eveready had signed a three-year distribution deal with Energizer back in 2011 which had a one-year automatic renewal. Mutua said that after Energizer Holdings Inc split into battery, (new Energizer) and personal care businesses, (Edgewell Personal Care) in 2015, they introduced new terms that did not favour the Kenyan business.

The split disrupted supply after Energizer moved Kenya’s supply location from Asia to Egypt, which Mutua says had capacity deficiencies and delayed stock delivery.

The loss making firm remained in the red this year with the net loss for the six months to March worsening by nearly four times which the management blamed on the stock outs.

The battery firm reported a Sh58.9 million net loss in its first half-year earnings, compared to the Sh12.4 million loss posted during a similar period last year.

The American firm also changed Kenya’s reporting lines and discontinued the one battery LED-flashlight. Eveready was also required to pay cash as opposed to an open account.

“We did not want to tie money for six months for the time it takes to place the order and get the stock,” Mutua said.

He said that even before the split, the Kenyan firm was not happy with the terms of operation.

The pricing was extremely restrictive as Energizer controlled the buying price and selling price, they controlled what product Eveready could rollout so as not to compete with them.

Energizer was also taking home a six per cent commission before this was lowered to 4 per cent based on revenues generated. The commission fee also covered for technical service and must be paid whether or not the company made profits.

Energizer also seconded managing director, the plant manager and technical staff and made investment decisions that prioritised its global outlook rather than local peculiarities.

The short annual renewals also created uncertainties and Eveready wanted long-term distribution contract. “We did not know whether they would remain open, you do not want to wake up one morning and watch the news to find out Energizer has been acquired,” he said.