E-Malt.com News article: South Africa: South Africa strategy rewards Namibian Breweries

South Africa strategy lifts Namibian Breweries, which has about 3.4% of the local beer market, Johnnic Communications reported September 25.

The company reported net profit of N$121m for the year to June, up from N$83m. Revenue was N$1,2bn, up from the prior year's N$929m, and operating profit was N$145m, or 43% higher than the prior year's N$101,5m. Namibian Breweries attributed operating profit growth to strong top-line growth in all markets. The Namibian-listed company said it had focused on costs, and improved its operating margin by two percentage points to 12.9%.

In the Namibian market, the company gained market share with its Windhoek Lager brand, and saw impressive growth in beer volumes, it said.

Namibian Breweries said it would continue to pursue innovation in the market, although it did not say if this meant that it would launch a new brand.

South African volumes, which include Windhoek and Heineken, ended the year with double-digit growth, said Namibian Breweries. The company said that its South African investment strategy was yielding results, and the Windhoek brand was growing market presence.

A shortage of premium beers between December and June aided volume growth, it said. Namibian Breweries, which earned about 56% of its revenue from exports to countries including Botswana and Angola, said its brands would benefit from the scale that Amstel would add to local partner Brandhouse.

Last year, overall volumes in SA were flat as a result of intense competitive pressures, chairman Sven Thieme said in its 2006 annual report.

The company launched the 750ml Windhoek Lager pack in SA last year, and said that this would provide an important platform for further penetrating the main market. The bulk of beer in SA is sold in 750ml bottles.

Brandhouse, a joint venture between Heineken, Diageo and Namibia Breweries, gained the right to distribute Amstel after Heineken revoked South African Breweries' right to brew the beet locally earlier this year.

However, Namibian Breweries said that competitive pressures in SA, a key market, were expected to increase. Although the group is in a strong position in this market, it will need to continue to leverage its position to obtain future growth in value. Christopher Gilmour, an analyst with Absa Asset Management Private Clients, estimated that Namibian Breweries sold less than a million hectolitres of beer in total last year in SA, while total South African beer consumption was about 27.3 million hectolitres a year.


26 September, 2007