EABL firms grip on market with Sh1bn Tusker redesign

East Africa Breweries Limited (EABL) on Monday unveiled a new-look Tusker bottle in a Sh1 billion redesign that is aimed at growing sales in a market where consumption volumes have remained flat.

Tusker brand, which is remodelling for the first time in 40 years, accounts for about 30 per cent of the brewer’s sales and is emerging as the biggest bet to ride the harsh market conditions as it grew volumes nine per cent in six months to December.

The brewer faces threats on its sales in the Kenyan market as the country settles to the new alcohol law that reduces the number of hours bars can operate, besides limiting estate businesses and legalising traditional, often cheap, liquors.

EABL managing director Senu Adetu said the redesign was aimed at boosting the market share of Tusker, which is one of the brands whose price the brewer increased by between Sh5 and Sh10 a bottle.

“EABL recorded a bit of ‘softness’ in volumes though it is still too early to give a conclusive overview since we are still studying the market to see the long-term effect of the law,” said Mr Adetu. “We have embarked on brand marketing as a short-term measure in mitigating this.”

Beer distributors said sales had fallen by double digit, but EABL is yet to report on the impact of the new alcohol laws on its sales.

Analysts reckon that the price review of its flagship brands and the rebranding of Tusker is geared more at growing sales in a bid to reverse the drop in half-year profits and cash.

In effecting the price increase, EABL executives are working on the understanding that most consumers who are feeling the heat of Kenya’s soft economy have fallen off the company’s radar and that any cutback in consumption that may arise from the price adjustments is unlikely to affect sales.

The new look Tusker bottle has a longer neck ushers and it follows in the rebrand of Guinness and Tusker Malt brands.

The firm saw the half year net profits for the period ended December last year drop to Sh4.1 billion from Sh4.2 billion as rising administrative expenses ate deep into sales, which grew 10 per cent to Sh20.4 billion over the period.

The financing of Tanzanian brewer buyout and dividend payments, which each took Sh4.9 billion, in the half coupled with a 24 per cent drop in cash generated from operations, reduced the brewer’s cash to Sh2.6 billion in December from Sh7.9 billion in July and Sh8.2 billion in December 2009.