NBL still brewing big

By By Honorine Kaze
November 2011
Prime Business
Namibia- Breweries Ltd (NBL) is looking to improve their foot-print in the Southern African Development Community (Sadc), following increased sales in a number of countries in the region, including South Africa and Botswana.

This follows their consolidated financial position in the Sadc region which contributed significantly to their N$211 287m profit after tax for 2011, compared to N$159 798m in 2010, which translated into a 32% increase in real terms.

NBL has been in an international partnership with Diageo Plc and Heineken BV, through a joint venture as an international distribution brand (DHN) in order to improve their market accessibility to other countries like those in the Sadc region and the rest of the world.

NBL Financial Director, Bruce Kidner told Prime Focus that the company’s focus on the Sadc region is meant to consolidate the market position enjoyed by the company so far and will also help NBL buffer their earnings in the future.

“We are not doing business unnoticed in the region and the local South African Breweries Millers’ (SABM) businesses are reacting to our brand’s presence, despite the fact that this is still relatively small. Therefore, we will continue to look at new ways to significantly grow our brands to new levels in Sadc and beyond. Currently, investments are underway to expedite our ambitions in these areas,” Kidner says.

NBL already commands a significant market share in South Africa despite serious competition from SABM following a partnership with Diageo Plc and Heineken BV also known as DHN Drinks, which was formed in 2008.

The DHN partnership, Kidner says, has grown NBL’s brands including a premium portfolio of beers (Windhoek Lager, Windhoek Draught, Tafel Lager, ciders and ready-to-drink beverages).

Kidner says: “South Africa is our biggest export market and DHN continues to grow the beer portfolio at single digit levels in financial year 2011 (F11).”

NBL brands are currently visible in Angola, Zimbabwe, Zambia, Mozambique and Botswana where NBL holds a 20% market share despite heavy competition from other multinational breweries.

Kidner notes that the partnership with Diegeo has also improved the company’s market visibility in Cameroon, the United Kingdom and Uganda. It is also helping shrug off intense competition from other exporters.

He adds that: “We are currently covering 80% of the beer market in Namibia and whilst we will not take our brand loyalty from our local consumers for granted, we see growth potential lying beyond our borders, particularly in our neighbouring countries in the Southern Africa region.”

However, it has not been all rosy for NBL to penetrate through the Sadc region as they also have to contend with the Botswana alcohol levy increases, which has made market access to that country slightly expensive.

Botswana increased their alcohol levy from 30% to 40% in December 2010 to stimulate their Government’s tax earnings.

“Forex exchange movements have also impacted on our earnings from Angola because the Namibian dollar has not been faring well against the green back,” says Kidner.
He however adds that: “The Namibian market remains important to them. While volumes grew by 3% overall for the year, growth was slower in the second half due to challenges caused by the flooding in the north; the unusual high amount of rain received across the country impacted general consumption. Tafel lager and Windhoek Draught performed well regardless, with both brands delivering significant growth compared to last year.”

According to Kidner, NBL is also reaping the results of the rebranding of Tafel Lager and brand investments on Heineken, Cub Shandy and Smirnoff RTD’s.

“We launched a Windhoek Draught 750ml sharing pack in Namibia as well as a 660ml sharing pack into the South African market. This has been one of the best launches seen in recent years with customers and consumers alike generating a lot of excitement around the brand. Our Tafel brand has also seen a significant increase in growth and following the recent pack renovation, we expect this growth to accelerate,” he says.

NBL recently invested N$263m in upgrading a number of old brewing and packaging equipment.

NBL has also invested in social responsibility programmes, including the DRINKiQ program, which raises awareness of the dangers of irresponsible drinking practices.

In addition, they have been running the ‘Think Ahead Don’t Drink and Drive’ campaign where they focus on the dangers of drinking and driving. Moreover, they also support various other causes, such as the ‘Teenagers Against Drug Abuse’ (Tada) program, the Cancer Association of Namibia as well as children affected by HIV/Aids in Namibia through the longstanding partnership with Dr Christina Swart-Opperman of AIDS Orphans’ Foundation Trust.

Bruce Kidner is the financial director of NBL since his appointment in July 2008. Before this, he worked for Guinness Ghana Breweries Ltd for three years. He has worked for Diageo Plc, a UK based drinks company since 1997 and specifically for the Diageo Africa region. PF