KENYA – Increased sales of Tusker beer lifted East African Breweries Limited (EABL’s) turnover to double-digit growth in the six months to December, a statement released by the UK parent company Diageo showed Thursday.
Net sales for the region’s biggest beer maker jumped 11 per cent as per Diageo’s announcement Thursday, indicating that EABL’s turnover could have soared to Sh35.4 billion based on the brewer’s numbers for last year.
As a Nairobi Securities Exchange (NSE) listed company, EABL has to get local regulatory approval before releasing its financials, but the numbers published by its parent company offer an advance glimpse into its performance.
“East Africa’s performance, with volume and net sales up seven per cent and 11 cent respectively was driven by robust performances in both beer and spirits,” Diageo said in a statement.
The Diageo Group CEO, Ivan Menezes, said in a briefing from London Thursday that EABL spirit sales increased 26 per cent.
“Double-digit growth in both Tusker and Guinness was driven by football-related activations. East Africa’s strong route-to-consumer and its drive to increase mainstream coverage together with local production capacity allowed us to get products into the market quickly and cost-effectively,” said Mr Menezes.
The London Securities Exchange-listed Diageo did not however disclose EABL’s profit, which is expected to be announced officially mid next month.
The figures show a faster growth for EABL from the four per cent increase recorded in the six months to December 2013 when it registered Sh31.85 billion in net sales.
EABL’s parent company says a strong performance by Tusker, Guinness and spirits contributed most to the sales growth.
Diageo says the strong growth by its flagship beer brands had seen the company begin to “lap up” the effects of the October 2013 excise duty that saw low-cost Senator Keg sales fall by about 85 per cent.
The levy forced EABL to cut back its operations at its Nairobi plant from seven to five days a week to reduce expenses like staff overtime pay and raw material orders as it strived to minimise the impact on its profits.
The brewer has focused on innovation in recent years, including launching Balozi – a malt-based, sugar-free drink – in December 2013 as well as Jebel Gold – a Sh10 per tot spirit –to help absorb the new taxation.
A year down the line, Diageo says the brewer has now recovered from the Senator Keg hit that saw its half year sales to December 2013 drop to single-digits for only the second time in eight years.
“Double-digit net sales growth of both Tusker and Guinness for East Africa, along with value offerings Balozi in Kenya and Kibo Gold in Tanzania, more than offset the continued decline of Senator that resulted from excise duty changes,” the UK brewer noted in the statement.
“Guinness performed well in Africa regional markets (Ghana, Cameroon and Angola) and Kenya where net sales grew by double-digit driven by an increased focus on trade visibility.”
Diageo also announced that EABL’s spirits, just like its flagship beers, also contributed considerably to its top line, with Kane Extra and Johnnie Walker Red leading the charge.
The 200 millilitre Johnnie Walker Red Label, whose retail cost ranges from about Sh800, was singled out for its performance in the Kenyan market.
Diageo says the miniature whiskey has particularly made inroads due to a marketing campaign dubbed “Johnnie Ginger” where the drink is marketed as a cocktail made with a ginger soda, particularly Coca-Cola’s Stoney Tangawizi.
“Spirits’ net sales growth was driven by Kane Extra and Johnnie Walker, which benefitted from increased distribution and new ‘Tavern Packs’,” Diageo’s statement read in part.