Beer consumption down sharply after bar closures: EABL
Kenyans have significantly cut their consumption of beer following the closure and subsequent limitation in the operation of bars, pubs and other entertainment joints.
According to an analysis from the East African Breweries Limited (EABL), bottled beer has taken the greatest hit from COVID-19 related disruptions.
The study covered sales in the six months leading to December 2020
The Kenyan market which represents 66 per cent of EABL’s entire business for instance saw total sales crash by 10 per cent in the reporting period to Ksh.29 billion.
Bottled beer sales sunk by 10 per cent while sales for the popular senator keg crashed 29 per cent as establishments closed down or significantly reduced operations.
The sale of bottled beer and keg continues to be greatly dependent on the operations of on-trade establishments including night clubs, pubs and bars.
In contrast, EABL marked growth in other portfolios with spirit sales for instance growing 11 per cent to include an equal 13 per cent jump in both mainstream and premium spirits.
The brewer’s sales across East Africa were however unaffected growing all portfolios in unison in spite of continued disruptions on the operations of on-trade establishments in Uganda.
EABL has shifted its distribution channels to favour e-commerce and home deliveries to sustain sales in an evolving operating environment.
“Our ability to shape new frontiers has been at the front and centre in navigating through the uncertain COVID-19 environment. We have innovated our route to customers in a period when on-trade has been curtailed or shutdown, in particular, deploying the boda-boda community in Kenya and Uganda to take products directly to consumers,” said former EABL Managing Director Andrew Cowan.
“We have also had to change our formats to ease consumption by subsidizing our traditional returnable glass bottles to a full portfolio of cans for our beer products, different pack sizes and one way glass.”
The combination of e-commerce and home deliveries has seen EABL near a return to pre-COVID-19 levels with half year sales only three per cent shy of Ksh.46 billion recorded a year earlier at Ksh.44 billion.
The half year sales were for instance 53 per cent higher in contrast to sales booked between January and June last year.
Nevertheless, EABL profits, announced on Thursday, crashed by 47.3 per cent to Ksh.3.8 billion on the back of greater tax provisions in the period.
EABL Managing Director Jane Karuku has however expressed optimism on a full business turnaround in the second half supported by cost conservativeness and innovation.
“We have seen resilience in our brands during the pandemic and as such, we will keep innovating and will not stop our capital expenditure investments. We have embarked on cost-cutting which has help us deliver the kind of results. We want to increase the urgency of cost efficiency to ensure our margins are well protected,” she said.