A drop in beer prices at the beginning of this year helped beer volumes to return to growth at Zambian Breweries plc in the fourth quarter of its financial year, shareholders were told at the company’s annual general meeting (AGM) yesterday.
January’s drop in the price of the company’s flagship Mosi and Castle lagers to K6.5 from K6 enabled the company to increase production volume by 21 percent during the quarter, mitigating a 23 percent fall in production in the first three quarters of the year to March 31, 2015.
“The reduction in price demonstrated how price sensitive the beer market, is and how prices drive volume. Affordability is so important to our consumers.” said managing director Annabelle Degroot. “It was a difficult year for Zambian Breweries, but our investment in a K200 million maltings plant in the Lusaka South – Multi Facility Economic Zone (MFEZ) shows our long-term commitment to the Zambian market and our optimism for the continued growth of the economy.”
“This commitment is reflective of our belief that we are long-term partners with the Government of the Republic of Zambia on their social and economic growth agenda,” she added.
Investment continues despite the company’s poor financial performance in the year, driven by a decline in beer volumes following the increase in clear beer excise tax in January 2014, and the depreciation in the kwacha, which heavily impacted raw material costs.
Outlining Zambian Breweries’ performance for the year ending March 31, 2015, finance director Herman Lubbe said the company continued to focus on long-term growth prospects, practically demonstrated through the consistent development of a local sourcing model for barley, sorghum and cassava from farmers.
Zambian Breweries’ mainstream 375ml Mosi, Castle and Carling Black Labels volumes declined by 23 percent in the first three quarters of the financial year. The company mitigated this decline by launching a 750ml bulk economy bottle option in Mosi and Castle in the last quarter and by driving its Eagle brand. In addition, in the last quarter the company reduced the price of the 375ml Mosi, Castle and Carling Black Label packs from K6.5 to K6.
On a positive note, the company reported that soft drink volume grew 10 percent on the back of improved availability and a focus on distribution.
Shareholders heard about the Zambian Breweries sustainable development agenda under the SABMiller Prosper strategy, through which the company seeks to achieve five imperatives: accelerate growth and social development across our entire value chain; endeavour to make products the natural choice for the moderate and responsible drinker; secure shared water resources for the business and local communities; create value through the reduction of waste and carbon emissions; and support responsible, sustainable use of land for brewing crops.
The major new initiative under the Prosper agenda during the year was the set up and launch of a recycling project. Under this project, the company is determined to take responsibility for improving the environment by establishing a collection network and market for recycled plastic bottles. The company believes it must take the first step to ensuring a cleaner living environment in Zambia.
During the year, Zambian Breweries also focused on aggressive water usage reduction in its plants.
And it has successfully introduced cassava into its Eagle brand which now allows it to provide a viable commercial market for cassava to small-scale farmers in the north. The Cassava project was a highlighted as a priorority for the company for the year ahead.
Whilst GDP declined from 2013 levels of 6.5 percent to 5.5 percent in 2014, Zambian Breweries has confidence in the growth prospects of the country’s economy, in spite of the deterioration in the CPI and exchange rate measures in the final quarter of the financial year. Government’s business agenda and continued investment in infrastructure projects will continue to spur economic activity and promote employment creation, which will in turn generate demand for the company’s products. The company will remain focused on providing affordable and quality products to loyal customers while remaining competitive and attracting new consumers, said Ms Degroot.
Now this is one area our president will excel.
People tend to do well in their specialist subject domain. Our president has the knowledge, and, might I add, a lot of experience in this area.
…And boost alcoholism in the spirit of save water drink beer.
Maybe beer should be used to generate power!
These are developments classified as “positives” in Zambia. This will merely encourage Zambians to be more intoxicated. How does this improve the employment situation in Zambia or help the common Zambian?
Hope taxes are paid to the government in equal measure!
Kikikiki at 4-days-holiday chinika beer 1/2 price Tate!!! Ama Jameson buy-1-get-1 FREE.
IFINTU NI LUNGU!!!! Polling stations no longer at schools but mu bar….2016!
“…. Abakali bakali, insupa ya KATUBI yalepuka!!”
This is Zambia’s version of the Opium war…Get Zambians so drunk and unproductive that it will be easy to colonise economically.They will get our copper at cheap prices while we nurse our hangovers,they will build us fake Hydro electricity power stations that have no generating capacity,while we nurse hang overs and blame low water levels,they will sell us cheap building materials so we can at exhorbitant prices destroy already existing buildings and build a jubilee city all while nursing our hangover.
Well written there dear sir. Who down voted such a great piece of advice.
UPND supporters, it has been a bad week for you. Here is a topic that can make amends for your bad week.
Kekekekekkee at least it will make them forget about the Hat Trick loss for only just! Kekekekekekee nice one!
Yes, am crying with laughter right now. You are sooooooo funny. (sarcasm, being a daft PF cadre I probably needed to point that out to you)
Upnd see politics in everything. Breakfast, Lunch, Supper, Bed time is all politics.
Can we for once not talk about politics, this is not about PF, UPND or FDD. This is about our people being poisoned by a harmful drug called alcohol. In the US it is deemed the number once drug, because it is easily accessed.
Where are the people that talk about our economy today, this is what UPND should be protesting, FDD should wear black against things like this.
In a country renowned for our alcoholism, this is not news to brag about.
A few years back I was shocked to hear a Kenyan guy saying, nobody can drink like a Zambian. And strange as it may seem he meant it as a compliment. He was drunk at the time so obviously you got to take his compliment with a grain of salt.
Nobody can drink like a German yet they are calling the shots in the euro zone, ironic right!
Reduced from k6 to k6.50?
The journo himself must have been high on Zambrew products!