High sales volumes of Carling Black Label softened yet another tough year for Kgalagadi Breweries Limited (KBL) in which returns on brands such as Castle Lite shrank.
Sales volumes of Carling Black Label rose by 3.5 percent last year, while Castle Lite’s had a horrible year with its 660ml product witnessing a -12.6% decline in sales volumes.
Sales volumes of other clear beer brands produced by the group fell by 11%, dragging overall volumes for clear beer down 2.7% percent for 2017, despite Black Label’s ‘heroics’.
Executives writing in Sechaba Brewery Limited’s 2017 Annual Report released on Wednesday attributed the lower clear beer sales to the prevailing punitive liquor regulations, the effect on production of last year’s Cyclone Dineo and restrained conditions in the broader economy.
Sechaba holds 60% equity in KBL, with the balance held by AbInBev, the global beverage giant created through the $100 billion SABMiller, Ab InBev merger. Sechaba posted a 12.2% drop in profits for the year to P111.6 million.
“The subdued volume performance was driven by a slow start in 2017 due to heavy rains and declining available income per capita, with performance slightly improving in the last quarter, but not enough
KBL also noted a 7.6 percent drop in sales volumes of traditional alcohol, with December, which is traditionally the peak period, seeing a 24% drop in sales volumes when compared with the same month in 2016.
Similar trends were noted on non-alcoholic beverages with a deficit of seven percent during the year.
“The (non-alcoholic) cans had a very tough year as they battled being the least affordable offering with decreased volume of -15.3% when compared with the prior year,” executives said.
The performer for the year was the fruit alcoholic beverages’ category, which has been “consistently posting double-digit growth”.
“The key performer brand is driven by Redds Vodka Lemon (which is gaining the position category captaincy. This stellar performance placed KBL amongst the best in the region and for the first time strolling into pole position ahead of competitor brands.
“We intend and expect more from this category as we are still driving and gaining share in this segment of the market.”