E-Malt.com News article: Uganda: Thing not moving on too well for Nile Breweries Ltd.

When it embarked on building a beer plant in Mbarara in 2012, Nile Breweries counted much of its fortune within the region's demand for beer. But the change in the political and economic environment has left top company officials scratching their heads for a solution, writes ALON MWESIGWA.

Things have not been moving on well for beer maker Nile Breweries Limited. The company faces a number of challenges across the region - high import taxes, for instance, according to company officials.

Speaking to journalists last week at the company's headquarters in Luzira, managing director Greg Metcalf said the market in the Democratic Republic of Congo and Tanzania were not flourishing because of the imposed import taxes.

"There was a little bit of disappointment when we built the Mbarara plant. We had in mind that we would be able to export to DRC but they imposed import tax on beer," said Metcalf. The Mbarara plant cost $90.6 million.

He added that beer sales first dropped by close to 20 per cent but now it is around five per cent. DRC introduced excise duty on soft drinks and beer in 2014 to the tune of 30 per cent. This led to an increase in beer prices, affected consumption and the beer market in the country contracted as a result.

The Mbarara plant opened in 2013 with the main target on the DRC market. In his first interview in 2014, Metcalf said the Mbarara plant was producing below capacity. Last week, he maintained it was a very good investment for the company.

Metcalf said although they delivered some growth, they could have delivered more had the DRC market not had issues. In Tanzania, Metcalf said they have experienced a drop in mineral water sales. NBL sells Rwenzori water in Dar es Salaam.

In South Sudan, SABMiller, the parent firm of NBL, had opened a unit there but it closed last year after it could not carry out any foreign exchange transactions to buy raw materials. There are fears within the government of South Sudan that foreign exchange transactions could be abused to finance rebel activities.

The group still has a vision that it can be reopened again when sanity returns, Metcalf said. In Uganda, the breweries are still concerned over government's insistence on tax on raw materials used to make beer. They feel this hurts the farmers' prospects.

Uganda's beer market is seeing growth after a more than a three-year dive in sales, Metcalf said, adding: "It was a satisfactory year for us."

Metcalf said: "From 2012, beer volumes have been in decline for almost three years. We are just recovering. We have done pretty well [in last year's financial results]."

The annual per capita beer consumption in Uganda is seven litres. Higher consumption is seen for illicit alcohol and this is the biggest risk, Metcalf said. Often, people meet at local drinking clubs to enjoy local brew.

SABMiller's Eagle Lager is the world's first sorghum lager and one of the best-selling beers in East Africa, Metcalf said.


27 April, 2016