Monday, September 28, 2020

Amstel stock out expected to further dampen KBL performance

The struggling Kgalagadi Breweries will undergo a new round of turbulence as a result of the ongoing Amstel beer stock out.

Although the effect will not show in the result to be released soon, the impact will certainly be there in the long term.

The Amstel brand contributes about 6 percent to KBL?s beer volumes.

The stock out is a result of the loss of license to brew Amstel by SABmiller, the giant London Stock exchanged listed parent company of KBL.
The loss of the license could not have come at a worse time for KBL.

For the past two years, the company?s trading conditions have been deteriorating, starting with a 12.5 percent Pula devaluation effected by government which saw the brewer lose close to P40 million.

Subsequent price hikes by the group have not helped the sales.

SABMiller lost the licence to brew Amstel, a leading premium brand after close to forty years.

Amstel which is henceforth expected to be imported from Holland is owned by Heineken, a Dutch brewer.

Heineken said they terminated their contract with SABMiller as a way of restricting SABMiller?s growth in Southern Africa.

KBL Public Affairs Director, Percy Raditladi, confirmed to The Sunday Standard that in the ?long term? the decision by Heineken to terminate the licence will affect them.

He said KBL will now focus on other premium brands.

?With the variety available in our total portfolio, we would also expect to see continued growth in the demand for our brands. But we shouldn?t underestimate the challenge,? said Raditladi.
He, however, said no job losses are anticipated so far.

The loss of Amstel by KBL is significant, especially because the company has been experiencing increasing competition from others.

Although still exceedingly dominant in Botswana, the KBL market share has been steadily declining, a result of encroachments by competitors selling ciders, clear beer and traditional brew.

Though not a mainstream beer, Amstel has been growing very popular in Southern Africa in general and Botswana in particular.

?I will not attempt to downplay future effects of us losing Amstel,? said Raditladi.

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