EABL doubles raw material purchases on rebounding alcohol consumption
East African Breweries Limited (EABL) has revised its demand for grains used in the production of alcoholic beverages on the back of a rebound in sales.
The company says it will now double its purchase of sorghum and barley to a combined 40,000 tonnes as it sees a resurgence in the demand for drinks following the re-opening of on-trade outlets such as bars and pubs.
“The easing of Covid-19 restrictions such as the reopening of on-trade outlets by the government has paved way for the revision of Kenya Breweries Limited’s grain demand. The company has reaffirmed its commitment to locally sourced sorghum and barley, the raw materials for brewing, by revising its grain demand upwards to 20,000 tonnes sorghum and 20,000 tonnes barley, which is almost double the volumes projected in August during the lockdown,” the manufacturer noted in a statement on Wednesday.
Earlier in August, EABL had moved to trim its grain purchases by 71 per cent in response to muted alcoholic drinks demand to a mere 22,000 tonnes.
The reversal of fortunes at the market is now expected to see farmers contracted by EABL to supply it with the essential grains receive a returns boost.
“During the lock down due to Covid-19, the economic restrictions depressed our sales and in turn caused us to reduce our grain demand. However, we took various steps to mitigate the impacts of the pandemic to our farmers. We also promised to review our grain demand upwards once trade was reopened warranting a greater supply from farmers as the demand for our beer grows”, said Eric Kiniti, EABL Group Corporate Relations Director.
“Our local sourcing programme is a crucial business priority for us because it enables us to grow value together with the farmers in Kenya. We are currently working with over 47,000 farmers across Kenya who earned over Ksh.2 billion last year.”
The COVID-19 led disruptions dented EABL’s earnings to the end of June 2020 as its profit slumped by 39 per cent to Ksh.7 billion on the back of depressed sales.
Net sales in its Kenyan and Uganda market was dented by COVID-19 restrictions which saw bars shut limiting trade in alcoholic drinks to take away outlets such as supermarkets and Wines & Spirits.
EABL is betting on the recovery of physical drinking joints to see a rebound in its own growth and has since set aside Ksh.500 million to support the recovery of on-trade outlets in Nairobi, Kampala and Dar es Salam.
“Going forward, our market teams have put in place robust plans to help us emerge stronger from this crisis once the measures are eased across our markets. We will continue to execute with discipline and invest prudently to ensure we are strongly positioned for a recovery in consumer demand,” EABL Managing Director Andrew Cowan said in July.