Brewer sees new demand in growing EA population

East African Breweries is betting that its regional expansion strategy will grow sales by doubling its customers.

The brewer said that by increasing its regional footprint from seven to 13 countries, it will grow its market base almost three times from 54 million to 140 million.

“Looking at the key performance indicator, it gives us a reason to enter into these markets,” EABL’s group business development manager, Mr James Mugo told the Business Daily.

The number represents the population which meets the legal drinking age, a segment that is expected to grow both in numbers and purchasing power.

“GDP growth is forecast to accelerate across Eastern Africa, inflation tending downwards and FDI’s (Foreign Direct Investments) on the increase,” said EABL in an investor presentation at the East Africa Investment Conference in Nairobi.

Regional economic recovery saw the brewer register growth in sales during the 2009/2010 financial year.

EABL reported a seven per cent increase in earnings for the year ended June 30, 2010, posting a profit of Sh8.83 billion compared to Sh8.26 billion the previous year.

The brewer said that in addition to an improved economy, easing inflationary pressure lifted its mainstream beers such as Tusker and Guinness.

Customer pool

The 2009 census shows that about 30 per cent of the Kenyan population of 38.6 million are aged between 18 and 40, creating a bigger customer pool for the brewer.

This population is also opened to the idea of trying out new things, according to Zimele analysts, meaning that loyalty to certain beer brands which has been a cushion for brewers in some markets may be eroded.

Mr Mugo said changes in demographics arm the company to better position brands.

Mr Johnson Nderi, a research analyst at Suntra Investment Bank said although there are mainstream beers in each country, new brands should be positioned to rev up sales.

One challenge facing the brewer, however, is the income distribution within the population.

“You have to look at how many people can you reach,” said the research analysts.