E-Malt.com News article: Kenya: East African Breweries registers 10% decline in mainstream beer segment in the six months to December 31
East African Breweries Limited continues to suffer stiff competition in the mainstream beer market, registering a sales decline of 10 per cent in this niche which includes flagship beer brand Tusker, The Star reported on January 30.
The regional brewer has for the second year experienced a softening market for Tusker, Bell and Serengeti beers sold in Kenya, Uganda and Tanzania respectively in the half year ended December 31, 2015. During the previous half year period, the company said Tusker sales dropped by four per cent.
The company recorded a single digit growth in sales of eight per cent to stand at Sh37.5 billion during the period.
"Tusker should land at your table at around Sh150 so I think what you can do to help us is to ensure you are buying at Sh150 from your retail outlets. I think we need to do just to our (retailers) math in terms of throughput volumes versus the price that I charge," said Kenya Breweries managing director Jane Karuku. KBL is a subsidiary of EABL.
The mainstream beer segment, EABL said, has also been hit by poor business in South Sudan because of political instability which has affected market operations.
"A lot of our mainstream beer was previously sold to South Sudan, a market which has now collapsed," said EABL managing director Charles Ireland.
Ireland also noted that local consumers were extremely price sensitive leading to drastic changes in various product segments of the company either due to a decline or rise in cost. Senator Keg sales rebounded due to a review in the tax charged to post a 106 per cent growth in sales. Consequently its price per mug was reduced by Sh5 to retail at Sh25.
In the half year ending December 31, 2014 EABL said Tusker sales were flat with the former KBL managing director Joe Muganda acknowledging then that the previously high-flying brand was struggling in the market.
Muganda attributed the flat sales at the time to a harsh economy and change of brands by some customers, as the company continued to promote its new market entrants such as Balozi.
During the period under review, EABL reported an underlying net profit of Sh5.48 billion, 16 per cent higher than a similar period in 2014. Total net profit, factoring in proceeds from the sale of its glass making business, rose by 67 per cent to Sh7.73 billion from Sh4.62 billion previously.
03 February, 2016