July 27, 2018 / 10:23 AM / 4 months ago

East African Breweries' CEO sees fast growth being maintained this year

NAIROBI, July 27 (Reuters) - Kenya’s East Africa Breweries expects net sales to keep growing robustly this financial year as the economy at home recovers and investments in spirits production and a new brewery start to pay off, its chief executive said on Friday.

The brewer, which is controlled by Britain’s Diageo and is known for its Tusker beer, said its net sales value grew by 10 percent in its second half to the end of June, the fastest pace in six years.

“We will continue the growth momentum that we started in the second half,” group CEO Andrew Cowan told Reuters after a news conference.

Sales of beers and spirits recovered in Kenya, which contributes 73 percent of annual revenue, after the conclusion of a prolonged election last November.

The economy nearly ground to a halt between August and November due to jitters over the presidential vote.

“We had political stability and the economy recovered so consumers had money in their pockets again,” Cowan said, referring to the second half.

The group’s sales were also boosted by a strong performance by the Tanzania market, which contributes 11 percent of revenue, which posted 41 percent sales growth mainly due to its Serengeti beer, a mainstream brand.

Sales in Uganda, where the company generates 16 percent revenue, grew by 4 percent.

EABL was investing millions of dollars in new brewing tanks at its Tanzania plant, Cowan said, to take advantage of the consumer demand there.

EABL is also benefiting from a 1 billion shilling ($9.97 million) new spirits bottling line at its main Nairobi brewery, which was installed late last year.

The company is producing some international spirits like Captain Morgan rum locally, allowing it to cut prices and reach more consumers.

A new $150 million brewery in the western Kenyan city of Kisumu will start production of EABL’s Senator Keg beer, a low-priced lager made from locally grown sorghum, later this year, Cowan said.

“We think we will be selling Keg out of that plant to locals around the Kisumu region and the west of Kenya before Christmas,” he said.

The main challenge facing the company was illegal brews, which account for 50 percent of the alcohol market in Kenya, EABL said.

$1 = 100.3500 Kenyan shillings Reporting by Duncan Miriri; Editing by Jan Harvey

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