National Breweries PLc is the leading producer of traditional beer (TAB), namely Chibuku shake and Chibuku super, pasteurized TAB with a longer shelf life, which gives it a distinct advantage with delivery to a wide geographic reach. “National Breweries became part of Anheuser-Busch InBev (AB inBev), the largest brewer in the world with more than 400 beer brands and some 200,000 employees in over 50 countires and also one of the worlds largest bottlers of sofe drinks, following a merger with SABmillier Plc in October 2016” (Annual Report, 2017).
In the past 15 months following change of control, the company has focused on rebuilding skills to support a stand-alone entity, aligning systems, processes and practices with those of Delta Corporation. This has been in the face of significant headwinds, a period in which margins were eroded due to high increases in the cost of imported packaging materials emanating from the currency depreciation. Moreover, the Company faced increased competition from bulk traditional beer producers and unregulated cheap spirits. During the period the Company discontinued the 1 Litre PET Chibuku Super Pack and introduced a 1.25 Litre pack which had the impact of lowering costs and improving margins (Abridged Financial Statement, 2019). As a result of this development, it was in a position to pass on some benefits to consumers through lowering the price per litre.
Major strides were also made towards the launch of an enhanced malt brewing formula packaged in a new 1.5 Litre returnable bottle to differentiate our beverage offering, whilst addressing affordability in the economy segment of the market. National Breweries production facility in Ndola was re-opened during the period ended 31st March 2019, bringing the total number of brewing facilities to three. This enabled them guarantee a better service and product quality to their customers and consumers whilst increasing their production capacity for future growth (Abridged Financial Statement, 2019). The business posted an operating loss of K21million during the period under review. However, “robust plans have been formulated to ensure that the Company returns to profitability in the short to medium term, including measures to manage the negative impact of the foreign exchange risk”.
Moving forward National Breweries expect trading to be tough in the remaining quarters based on the face of currency and inflationary pressures on disposable income. However, the company remain optimistic about the future with the planned implementation of presumptive Excise Tax for traditional beer by the Zambia Revenue Authority (ZRA) that will significantly level the playing field hence engendering a culture of legislative and tax compliance within the industry (Abridged Financial Statement, 2019). National Breweries tends to adhere to its strategy of offering its consumers choice through innovative and cost-effective packaging that will enable them achieve competitive pricing for their products and stimulate business growth (Annual Report, 2017).
For now, the shareholders await the 51st Annual General Meeting which will be held at the Intercontinental Hotel, Makumbi hall on 28th June 2019 at 9:00hrs, where the Board of Directors of National Breweries Plc (“the Board”) will advise the Shareholders that for the financial period ending 31st March 2019, the basic earnings per share of K (0.60) is lower than K0.02 of the corresponding period for the Company hence the directors do not recommend the payment of a final dividend for the period ended 31 March 2019 in view of the financial results recorded.