East African Breweries sees recovery gaining pace in second half

PUBLISHED: Fri, 29 Jan 2021 10:08:52 GMT

By Duncan Miriri

NAIROBI, Jan 29 (Reuters) – East African Breweries expects sales to recover from a coronavirus-induced slump in its second half to June, its outgoing chief executive said, as nations in the region relax measures to curb the spread of the virus.

The brewer, which is controlled by Britain’s Diageo Plc , posted on Thursday a 3% drop in net sales for its first half to end December as sales were pummelled by the closure of bars. Post-tax profit plunged by a third.

Net sales will start to grow again, Andrew Cowan, EABL’s outgoing chief executive, told a virtual investor briefing on Friday.

“We do believe the restrictions we have in East Africa are time-bound,” he said, adding that the expected arrival of COVID-19 vaccines and fairly low cases of new infections in Kenya will also aid a rebound.

The company, which dominates the regional alcohol market with Tusker beer and Johnny Walker Scotch whiskey among other brands, turned to electronic commerce last year to prop up sales.

It set up an online distribution platform where consumers could order drinks, and partnered with delivery firms like Glovo to deliver them straight to their homes.

The share of that distribution channel has grown 10 times from pre-pandemic levels, Cowan said, without sharing actual numbers.

Electronic distribution, along with a shift to more canned drinks and disposable glasses, was likely to keep growing as bars in Kenya have re-opened with shortened hours and consumers are still opting to buy online, he said.

EABL, which operates in Kenya, Uganda and Tanzania, posted strong sales growth in Tanzania and Uganda in the first half, helping to offset a steep drop in Kenya, which accounts for two-thirds of sales.

It also reported rapid growth in its spirits category, driven by high demand for gin.

“Gin is exploding across East Africa,” Cowan said.

The demand for the spirit is driven by a growing base of young urban consumers, said incoming group CEO Jane Karuku. (Reporting by Duncan Miriri; Editing by Jan Harvey)

(c) Copyright Thomson Reuters 2021. Click For Restrictions – https://agency.reuters.com/en/copyright.html

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.