KBL expects mild coronavirus 'hangover'
Mbongeni Mguni | Friday June 12, 2020 12:00
Last year, KBL sold 153.5 million litres of alcoholic beverages, or six percent up from 2018, with St Louis named the ‘star performer’.
KBL’s sales, however, suffered a knock this year after government banned alcohol trade on March 28, 2020 as part of a raft of measures to control the spread of the coronavirus (COVID-19).
Sales were only lifted on June 3, and although trade is still limited to certain days and hours, volumes have reportedly been very high.
Sechaba Holdings directors said its businesses would suffer from the broader COVID-19 effect on the economy, such as the adverse impact on unemployment. This, in turn would impact the outlook for associates such as KBL, in which Sechaba holds 49.9% equity.
“This impact is expected to be temporary and the businesses will survive,” directors said in an Annual Report released this week.
“However, it is advised that the situation is changing constantly and that it will be monitored closely.”
St Louis is due to feature prominently in KBL’s battle to survive 2020, having enjoyed 56% growth last year. For a long time a favourite within the local clear beer market, St Louis was nearly ‘killed’ by the 10-year long period of a punitive alcohol levy as consumers switched to beverages with high alcohol content.
Botswana Institute of Development Policy Analysis researchers found that as the levy made alcohol more expensive each year, imbibers dumped the 3.5 percent alcohol content St Louis in favour of stronger drinks that could reduce the cost of “getting drunk”.
“As consumers switch to alcoholic beverages with high alcohol content and spirits, the local brand, St Louis has suffered as it has low alcohol content,” the researchers found.
At 3.5 percent, St Louis was marketed successfully as a light, refined taste prior to 2008, but with the inception of the levy, strategists at Kgalagadi Breweries struggled to find space for it in a market leaning towards stronger drinks.
Adjustments were made to the standard to introduce a higher value ‘Long Tom’, alternatives such as St Louis Export were launched, marketing campaigns and activations were heightened, but St Louis’ popularity plummeted.
Sefalana group managing director, Chandra Chauhan has also noticed the trends against St Louis. Sefalana is one of the country’s top wholesalers of various liquor brands.
“Botswana used to be St Louis country, making up to 60% of our sales, but now it’s Carling Black Label,” he said two years ago.
“At one point, we used to export St Louis to South Africa, but now it’s a dead product.”
Black Label, which boasts a 5.5 percent alcohol content, remains KBL’s most popular clear brand contributing 54% to volumes sold. Black Label, however, had sales growth of 13% in 2019, compared to St Louis’ resurgent 56%.
“St Louis Lager was a brand that saw great innovation with a pack and claim reposition,” directors said.
“This allowed Batswana to proudly express the beer in their way, with a claim that solidifies that brand as Botswana’s Refreshing Lager.
“We anticipate great growth for Botswana’s heritage brand in the year 2020.”