LUSAKA- Listed beverages company Zambrew, has suffered a 20% dip in volumes largely as a result of divesture from sparkling beverages production.
In the latest financial results for the 6 months period to June 2019, volumes eased by 20% to 966,000 hecto litres from 1,213,000 hecto litres in the same period last year.
In December of 2018, Zambrew sold its interest in the soft drinks business following Coca Cola’s notice of intent to terminate bottling rights with the company after Zambrew’s indirect acquisition by Ab Inbev.
In 2016 following the acquisition of Sab Miller which at that point controlled a number of regional beverages companies including Zambrew, Coca Cola elected to withdraw its bottling rights from all the operations affected by AB InBev’s acquisitions. AB InBev through Pepsi, is a close rival to Coca Coca in both alcoholic and non-alcoholic beverages segments.
The move to divest was effected over the 2018 period and finalised at the end of the year, which means financial results would only reflect the impact beginning 2019, a period covered in the latest results. Zambrew however remains Zambia’s largest beverages producer.
Despite the overall plunge, clear beer volumes grew 5.1% supported by strong growth in Carling Black Label and Castle Lite brands which grew 131% and 13% respectively. Consequent to the dearth in volumes, total revenues fell by 9%. Profit before tax grew by 12%, despite the Coca Cola business divesture due to what the company said were robust cost control measures.
2019 will mark the first year in 6 years, over which Zambrew will report a decline in revenue. The company’s revenue has grown at an average compounded annual growth rate of 10% per annum from KWZ1.7 billion in 2015 to KWZ2.84 billion.
Regards the trading environment, Zambrew said the period was characterised by a difficult trading conditions as liquidity on the market tightened. Reduced liquidity on the market led to decreased disposable income which stifled growth in some of our beer categories.
EQUITY AXIS NEWS.
