Zambian Breweries’ profits jump to K1.45 billion

Zambian Breweries Plc has earned increased profits of K1.45 billion after tax during its 2018 financial year from just K220 million in 2017, driven by record-breaking beer volumes, according to the company’s results.

But the brewer says it is braced for a demanding 2019, amid economic uncertainty, increased regulation and a continued threat from smuggling and illicit alcohol.

In a statement announcing its audited financial results for the year ended December 31, 2018, Zambian Breweries posted huge profits of K1.45 billion after tax last year from only K220 million in 2017, mainly driven by record-breaking beer volumes, which grew by 23 per cent over the two corresponding periods under review.

“Results for the year 2018 were remarkable, especially on the clear beer side, with volumes growing at a record of 23 per cent. Our total volumes grew by 13 per cent, partially eroded by a decline of 8 per cent in the soft drinks category, leading to a total growth of 11 per cent,” Zambian Breweries stated.

“The increase resulted from the successful execution of our growth strategy, driven by expanding distribution through a ‘go deep and go rural’ plan linked to affordability, coupled with targeting the growing middle-class segment with our locally produced and imported premium beer brands. Locally-manufactured beer sales volumes were up 29 per cent above prior year, driven by strong growth of the 750ml mainstream and affordable packs. The mainstream 750ml pack recorded impressive 166 per cent growth, while the affordable 750ml pack recorded 77 per cent growth.”

It stated that the launch of popular brands, such as the globally-renowned Budweiser, had also gained traction.

“The launch of Budweiser and Stella Artois continued to gain traction, having been well received in the market. The premium segment is back to growth with an 8 per cent improvement against prior year, thanks to the recovery of Castle Lite and the introduction of Stella Artois and Budweiser. Strong gains were recorded by Stella Artois in the high-end segment, and there were encouraging results from Budweiser,” it stated.

But the company added that it was braced for a demanding 2019, amid economic uncertainty, increased regulation and a continued threat from smuggling and illicit alcohol.

“We are braced for a demanding year in 2019, amid economic uncertainty, increased regulation and a continued threat from smuggling and illicit alcohol,” stated Zambian Breweries.

In October, 2016, AB InBev, the Belgium-based brewer, took over ownership of SABMiller in a US $100 million deal, which assumed new ownership of Zambian and National Breweries.

Ab InBev, which manufacturers the globally-renowned Stella Artois and Budweiser beer brands, among others, closed a more than US $100 million acquisition of its fiercest rival and world’s second brewer, SABMiller.

This meant AB InBev has since 2016 been in the process of drastically increasing its market share in regions around the world, particularly Africa, where SABMiller had a visible presence through its country-level subsidiaries.

         

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