E-Malt.com News article: Uganda: Uganda’s beer industry poised for positive end of year results

The beer industry in Uganda is poised for positive end of year results, according Fred Kakongoro Muhumuza, an analyst and senior manager for Financial Services Inclusion Programme at KPMG Uganda, but the two big brewers still need to exploit the available opportunities.

Muhumuza says the 2014 performance figures for Uganda Breweries Ltd and Nile Breweries Ltd look more promising compared to the same period last year, The Independent reported on December 1.

“2013 was a tough year from the consumers’ point of view. They had little disposable income, which made beer volumes to be down by about 5-10%. By far, 2014 ends as a better year for the sector,” he says.

“Commercial beer consumption in Uganda grew by more than 28% throughout the 12 months, a trend that is expected to continue in the coming years. There are still unexploited opportunities in the local beer market,” he adds.

He advised companies in the beer sector to tap into such opportunities to bolster their performance.

The healthier performance was first manifested in UBL’s half year financial performance results for the period ended June 30, 2014 with a net sales growth of 13%.

The UBL results were noted to have buoyed the East African Breweries Ltd (EABL) results for the period, which saw group sales grow by 4% and profit after tax by 5%.

The EABL group sales in export markets grew by 50%, while spirits, premium and mainstream beer delivered a double digit growth. Senator Keg, a product on the Kenyan market, significantly declined post the implementation of excise tax.

While unveiling the results in August, EABL Group Managing Director Charles Ireland sounded upbeat about Uganda.

“I am very pleased with our performance in Uganda that yielded a net sales growth of 13%,” he said. “Our price mix interventions and effective launch of Reserve brands played a key part in securing this positive result, along with a successful new Bell Lager campaign and a very strong performance on Uganda Waragi.”

The performance proved a great stride to the company as compared to the previous year when group executives highlighted a general slowdown in the first four months of 2013.

But UBL might not have time to savour its new-found buoyance as the year closes because its closest rival SABMiller’s Nile Breweries Ltd (NBL) recently announced a 20% reduction in the price of its low-end beer brands in the Eagle family.

The move appears to have been designed to boost and maintain NBL’s share of the market segment.

“When we keep our brands affordable, beer volumes grow,” said NBL Managing Director Greg Metcalf in a statement. The prices of NBL’s higher end beer brands including Nile Special, Club, Hero, Nile Gold, Castle Lite, Redds, and Castle Milk Stout remained unchanged.

Despite Muhumuza’s positive projections, UBL’s Corporate Relations Manager Lillian Akot refused to be drawn into commenting about the company’s last six-month performance. She maintained that UBL’s position in the market is the strongest and advised market watchers to look out for results of their performance when they are released.

The company, which is the country’s oldest brewer and a subsidiary of Diageo, the British multinational alcohol beverages company, releases its results twice every financial year.

An insider from UBL confirmed that the company appears to be gaining market share as it has since increased production. This is after a strategy to boost their strongest brand - Bell Lager - through sustaining a Bell Lager campaign and increasing the strength of the Uganda Waragi brand.

“Production is currently at full capacity with more than 200 tons or more daily depending on the brands. It is only during maintenance schedules or repairs that production can get to a stand still,” the insider said. A stockist for UBL also confirmed that during the same period last year, the company would run up to a week without production as the market was down. He said, however, that since the start of this year, the company has steadily increased production and sales volume.



02 December, 2014