Keg, whiskey drive EABL profit growth

Kenya Breweries Limited (KBL) Supply Chain director Patrick Kamugi pours KBL Managing Director Jane Karuku some Senator Keg during a test-run of the Sh15 billion plant in Kisumu on July 17, 2018. [Courtesy]

East African Breweries Limited (EABL) has posted Sh7.2 billion in profit after tax for the half-year ended December 31, 2019. This represents a 10 per cent increase compared to a similar period in 2018.

According to the company’s latest financial results, increased sales of spirits and the low-budget Senator Keg beer pushed up overall sales by 10 per cent to Sh45.9 billion.

“We are pleased by this performance,” said Group Managing Director Andrew Cowan. “Although excise duty escalation on alcoholic beverages in Kenya’s last budget impacted bottled beer, a more stable operating environment provided an opportunity to continue our growth momentum during the period.”

The company registered outstanding performance in Senator Keg, with the low-priced beer growing by 20 per cent. A new plant at Kisumu is expected to drive growth in this segment.

Mainstream spirits and Scotch whisky sales, on the other hand, increased by 17 per cent and 23 per cent respectively, with the company noting remarkable performance on the Black & White brand.

However, EABL says Treasury’s move to increase excise duty pushed down sales for bottled beer by one per cent, despite several brand campaigns.

Subsidiary Uganda Breweries saw a 10 per cent increase in net sales, driven by 15 per cent growth in beer. However the company cited Uganda’s ban on selling spirits in sachets for a modest one per cent increase in sales of spirits.

“Marketing campaigns such as Bell All-Star Tour and Tusker Lite Neon Experience helped drive bottled beer growth by 15 per cent,” said EABL in a statement.

Tanzania’s Serengeti Breweries recorded 19 per cent growth, making it the fastest-growing subsidiary.

“We are confident there is ongoing potential for growth across our geographies and categories,” said Mr Cowan.

“At the premium end, people are trading up while at the price-sensitive end, we believe we can recruit more illicit alcohol consumption by offering safe, quality options.”

“We remain cautiously optimistic about our second half of the year, although unpredicted tax and regulatory changes and challenges in our operating environment continue to present potential risks in the horizon,” said Cowan.