Harare – Natbrew a Zambian sorghum beer producer, recorded a 21 percent volumes growth during the first quarter period to June 30, 2018 which helped reposition earnings on a growth trajectory after years of losses.
The growth in volumes was attributed to improved product supply and competitive supplying. In years past Natbrew suffered subsequent losses due to the proliferation of unregulated opaque beer in Zambia
Over the years, opaque beer market in the region has seen the mushrooming of unlicensed brewers of traditional beer and homemade cheap spirits.
Resultantly, Natbrews production volumes shrunk 37 percent to 519Hls in December 2017 from 820Hls same time in 2016 which translated to a 28 percent slump in beer sales for revenue to ZMW142.15million.
Despite improved fundamentals such as reduced borrowing costs from an easing monetary policy by the Bank of Zambia in 2017, reports show the company’s market share continued to erode from competition from illegal bulk traditional beer.
Competitive pressures usually force down pricing which negatively impact profit margins. Unregulated, illicit alcohol remains a key challenge for the business and the beverage industry as a whole.
The large scale and unregulated sale of sub-standard bulk opaque beer across Zambia makes it very hard for legitimate businesses such as Natbrew to compete on a level playing field.
Economic analysts say the poor quality of unregulated beer contributes significantly to alcohol related social ills, which ultimately further damages the reputation of the total opaque beer category.
The non-payment of tax by most of these entities also means that Government looks increasingly to the legitimate businesses to raise revenue.
The company operates from two plants, one in Kitwe and the recently upgraded $30 million Chibuku plant Lusaka, touted as the most modern Chibuku plant in Africa.
Natbrew’s Chibuku brand is the most popular opaque brand and commands approximately 60 percent of the market share for opaque beer.
The plant has the capacity to produce 1,5 million hectolitres of opaque beer with the option to expand to 2,5 million hectolitres.
Overall, the company’s productive capacity is now more than 3,6 million hectoliters and majority owned by ZSE listed Delta.