Namibia: Namibia Breweries silent about future of King Lager brand

Namibia Breweries Limited (NBL), a subsidiary of the Ohlthaver & List (O&L) Group, remains tight lipped about the future of its much-hyped locally produced beer, King Lager, amid indications from insiders the brand is struggling to make traction in the highly competitive beer market, observer.com.na reported on March 25.

The future of the brand also determines the future of its agreement with the Ministry of Agriculture, Water and Forestry and the Agricultural Business Development Agency (AgriBusDev), where the company committed to buy all the barley harvested from an irrigation project in the Kavango region, with a 10-year target of 12,000 hectares and projected employment creation of 2,500 Namibian job opportunities over a 10-year period.

Launched more than three years ago, King Lager, according to the company, was to be the first ever commercially brewed beer that uses Namibian barley and was expected to become a game changer for the giant brewer.

“We are continuously finding new ways to innovate our brands, however, due to business confidentiality, we cannot divulge further information,” NBL Finance Director, Graeme Mouton said.

This comes as the brewer is already betting its future on flavored alcoholic drinks, with Tafel Radler, launched in September last year, exceeding all expectations in terms of consumer uptake.

“Tafel Radler has exceeded all expectations and is performing very well. The consumer shift towards flavoured and low alcohol beverages continues, with a commensurate increase in demand for products such as Tafel Radler. This trend is expected to continue,” Mouton said.

Already the company has revealed that it has discontinued Vigo and Code soft drinks due to unsustainable volumes.

The NBL Finance Director, however, did not hide the impact that the depressed economy and declining consumer spent has had on its sales in its half year ended 31 December 2018, a position which PSG Namibia in an analysis also alluded to.

“Namibian beer volumes have remained flat in line with prior year. A great achievement in the economic conditions. The effect is however felt as volumes did not increase. The previous 2 financial years we’ve experienced a contraction in volumes. For the six months under review we’ve remained flat and managed to stop further declines,” he said.

The brewers export volumes were down 35.1 percent in the period under review, a position which Mouton attributed to changes management in some of its export markets.

“This is mainly due to Heineken South Africa taking over our Botswana operations to achieve better economies of scale and to further leverage the successful partnership,” he said.

Quizzed if the company was feeling the pressure of increased competition in the local market, he said, “we encourage healthy competition to ensure consumers are satisfied with the best Namibia has to offer.”

The NBL Finance Director said no jobs cuts were planned by the company going forward, with revenues up 13.8 percent to N$1.6 billion and profits up 52.7 percent to N$367 million.

“The O&L group have strong feelings against retrenchment. As you can see from our results, we are fortunate enough to be in a space where this is not a concern for us as we continue to create a future and enhance life for every stakeholder,” he said.

On the impact of management changes, which saw long serving NBL Managing Director, Wessie van der Westhuizen, becoming the Chief Executive Officer of the O&L Group, replacing Peter Grüttemeyer who retires at the end of June after 15 years of service in the position and the appointment of Marco Wenk in his position.

“The change brings opportunity as the changes in management consist of highly experienced and capable individuals who can contribute to NBL’s continued success. The O&L values are entrenched throughout the business and thus we are committed to continue operating in breakthrough,” he said.

Mouton said the company was moving ahead with its water optimization plan in its operations, as part of efforts to reduce water usage in its operations, where in 2016, 4.4 litres of water were used to produce one litre of beer.

“We have boreholes that are independent from the City of Windhoek which we can utilize to meet our demands. We also constantly improve our processes to ensure optimized utilization of water and continue to explore further sustainable solutions,” he said.

NBL’s brand portfolio includes Windhoek Lager, Windhoek Draught, Windhoek Light, Tafel Lager, Tafel Lite, Tafel Radler, King Lager and McKane.

25 March, 2019