•The company recorded a net sales decline of 3% to Sh44.5 billion for the half-year ended December 2020.
•eCommerce and off-trade remain key drivers of sales this year as the brewer continues making investment in can beers and spirits.
East African Breweries Limited (EABL) continues to bank on eCommerce and off-trade to drive its sales this year, after recovering from a tough first half of 2020.
This, as it anticipates for re-opening and full operations by bars( on-trade) in the near future, which remains a mainstream channel for its sales.
The regional beer and spirits maker recorded a net sales decline of three per cent to Sh44.5 billion for the half-year ended December 2020, compared to the same period last year.
The performance is however 53 per cent better than the previous half (January to June 2020) that was significantly impacted by Covid-19 restrictions.
During the July-December period, the Group reported a half-year profit of Sh3.8 billion, a significant improvement compared to the Sh0.2 billion loss recorded in the January-June 2020 half.
Management now says it will continue with its investment strategy towards a post-covid recovery, with double digit growth remaining its target.
In Kenya, off-trade remains one of its key selling points as the Covid restrictions on bars' operating hours remain in place.
Off-trade market includes retail outlets like hypermarkets, supermarkets, convenience stores, mini markets,and wines & spirits shops.
According to managing director for Africa Regional Markets, Andrew Cowan, the company has witnessed a shift in market trends which informs its continued investment to ensure business continuity and product delivery.
This includes demand for home deliveries, family occasions and groups avoiding traditional drinking places such as bars and night clubs.
The company continues to make heavy investments in canned beer, one-way beer bottles and wines and spirits brands.
Our brands remain resilient and we will continue to invest in themEABL Group Managing Director and CEO, Jane Karuku
“We will also continue investing and driving sales of our bottled flagship beers across all markets in the region,” Cowan said during a media briefing on Friday.
The company's eCommerce investment and business is currently 10 times bigger than pre-Covid-19, Cowan noted, an indicator more people prefer deliveries and consumption at homes in the wake of the night curfew.
In the first half of the 2021 financial year, EABL’s spirits net sales grew by 10 per cent , partially offset by beer net sales decline of eight per cent against the same a year before.
Decline in beer sales was primarily driven by Senator Keg due to Covid-19 related countrywide bar closures in Kenya.
“Our brands remain resilient and we will continue to invest in them,” EABL Group Managing Director and CEO, Jane Karuku, said.
The brewer, she says, has ensured a dynamic and close connection with the consumer throughout the Covid-19 pandemic, adapting to the changing consumer needs while providing safe channels through which they have continued to enjoy its products.
“We remain cautiously optimistic about the second half of the year, not least because the pandemic and potential shifts in our trading environment present risks on the horizon,” Karuku said.
On the onset of the pandemic, EABL embarked on a cost-cutting drive which saw its administrative expenses reduce six per cent compared to the same period last year, driven by savings in discretionary spend.
Net sales in the half-year to December declined three per cent compared to the same period last year, despite the impact of on-trade restrictions and closures due to Covid-19.
The profit after tax reported was 32 per cent decline compared to the same period last year, excluding the impact of a one-off tax provision.
Gross margin however improved to 43 per cent from 38 per cent in the previous half (January to June 2020), as bars were partially opened in the first quarter and further easing of restrictions in the second quarter which drove some recovery in volumes.
In recognition of the uncertainty in the external environment and the need to conserve cash to enable the business to continue on a recovery trajectory, the Directors do not recommend an interim dividend.
Markets highlights by countrywide
In Kenya, sales declined 10 per cent compared to the same period last year due to Covid-19 containment measures that saw continued closure of bars as well as a ban on sale of alcohol in restaurants in the first quarter.
Although the bars and restaurants were re-opened in the second quarter, operations were impacted by the protocols implemented for safety of consumers as well as the restrictions of opening hours and the curfew.
Uganda delivered net sales growth of 13 per cent compared to the same period last year.
This was driven by leveraging wholesale channels, enlisting of new selling points at mini-shops, home deliveries and e- commerce partnerships.
With minimal impact of Covid-19 related lockdowns, the Tanzanian market continued to deliver double-digit growth.
Net sales grew 17 per cent compared to the same period the previous year, driven by broad-based growth across all categories.
Beer net sales grew 17 per cent with strong growth from the ongoing success of the Serengeti trademark.
Overall business in the region however remains affected by excise duty increases, general price inflation and additional costs related to digital tax stamp among other measures by governments.
Last month, EABL started the roll-out of its Sh558 million ($5 million) East African fund,Raising the Bar programme, to help pubs and bars recover from the Covid-19 disruptions.
The support constitutes hygiene kits, permanent sanitizer dispenser units, as well as protection screens for bars to comply with reopening protocols and to deliver the required hygiene standards.
Eligible bar owners in the Nairobi metropolitan have until February 12, 2021 to apply for the support while fund launch dates in Uganda and Tanzania will be announced in coming months.
“We know this has been the most difficult time for the hospitality industry. We have no doubt that the Raising the Bar programme will provide the much-needed shot in the arm for these outlets at a time when they most need our support,” Karuku said.