East African Breweries Limited (EABL) #ticker:EABL is banking on increased sales of its spirits in Kenya to lift the company’s revenues this year amid a sluggish performance of its beer brands.
EABL managing director Andrew Cowan said the brewer’s new Sh900 million spirits line at its Ruaraka headquarters is expected to help the company meet growing demand for its spirits brands in the country.
“Spirits will be a big part of sales this year,” said Mr Cowan at a Friday press briefing shortly after announcing the company’s results.
The NSE-listed brewer’s revenue in the year ended June rose 4.57 per cent to Sh73.45 billion driven by its spirits segment and bottled beer sales in Kenya and Tanzania.
The EABL, which is controlled by Britain’s Diageo, reported a 14.79 per cent drop in net profit in the year ended June weighed down by higher costs and tax expenses.
The firm made a net profit of Sh7.25 billion in the period compared to Sh8.51 billion a year earlier.
Mr Cowan said sales of EABL’s mainstream spirits portfolio increased 23 per cent compared to beer sales, which rose four per cent, fuelled by the growth of bottled beer. Its lower-end keg beer suffered a 13 per cent decline in sales on the back of political uncertainty in Kenya in the first half of 2018 and temporary closure for an upgrade of its Nairobi-based Ruaraka plant.
Some of EABL’s mainstream spirits include Chrome Vodka, Kenya Cane and the Black & White whisky brand.
The company last year started producing some international spirits such as Captain Morgan rum locally, allowing it to cut prices and reach more consumers.
The EABL had earlier this year forecast that spirits will contribute half of its annual revenue in next five years as a growing middle class embraces the beverages.
Spirits are one of Kenya’s fastest growing alcoholic beverages category compared to beer, whisky and wines, a factor that has touched of rabid competition for consumers, according to market research firm Euromonitor International.
“The growing young population in Kenya has been providing an opportunity for strong growth,” said the London-based business intelligence firm.