Diageo owned East African Breweries aiming to jumpstart bottled beer sales in Kenya

Kenya Breweries Half Year results 2018
EABL Group Chairman, Charles Muchene (Right), EABL Group CEO, Andrew Cowan (Middle) and KBL Managing Director, Jane Karuku during the EABL Half Year Results 2019 announcement this morning at Serena Hotel. Photo: Twitter/KenyaBreweries

The Chief Executive of East African Breweries Limited (EABL), owned by Britain’s Diageo has said the company is hoping to jumpstart growth in bottled beer sales in Kenya, following the recovery of its biggest market’s economy and the expected government move to delay tax increases.

Best known for its iconic Tusker beer, the brewer said sales of bottled beer were flat in the first half of the year to December following an excise duty rise of 5.2 percent. 

In an attempt to boost government finances, the country, which contributes 70 percent of annual revenue, had raised excise duty on beer by 43 percent at the end of 2015, which negatively impacted demand for EABL’s beer.

With one of the highest rates of tax on beer in Africa, Tusker’s recommended retail price of Ksh 150 saw almost half going to the taxman. 

Kenya Breweries Half Year Results 2019
Pre-tax profit growth of 33% was driven by continued focus on productivity, partially offset by up-weighted marketing investment. Strong cash conversion and lower interest rates drove reduction in interest charge in the year, helping boost the bottom-line. Photo: Twitter/KenyaBreweries

Driven by a 13 percent jump in net sales to Ksh 41.6 billion, pretax profit at EABL surged by a third in its first half, as sales of its low-priced Senator Keg beer, made from locally grown sorghum, grew by 35 percent. This was a result of increased distribution, commercial initiatives as well as the rejuvenation of the brand through powerful national campaigns.

Following the results and the announcement of a 25 percent increase to the interim dividend, shares of EABL rose more than 10 percent on Friday. The company also reported double-digit growth in sales of high-end spirits, such as Ciroc Vodka, and its mid-priced Chrome vodka. 

East Africa Brewery Ltd 2019 Quarter 1 results

The company’s White Cap and Balozi (Swahili for ‘Ambassador’) beer which have lower sugar and calories, are also an attempt by the company to attract health-conscious consumers to move sales of bottled beer back into growth.

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