Budweiser lacks taste for Chibuku 2017
Beverage, National Breweries, Zambian Breweries

On 16th May 2017, shareholders of National Breweries were issued with a cautionary note relating to circumstances relating to NatBrew. A further cautionary note was issued on 17 th of May which indicated that the maker of global brands BudweiserCorona and Stella Artois (Anheuser-BuschInBev SA/NV) was undertaking a review of its strategic options relating to its investment in NatBrew, including a possible sale of its effective 70% shareholding in NatBrew.

National Breweries which is a subsidiary of SABMIller plc looks certain not to make the cut in the lineup of beverage companies that AB InBev owns. According to Wikipedia, the company was enlarged in October 2016 when AB InBev purchased SABMiller and concluded a merger of the two entities. AB InBev is the world’s largest brewer even before the acquisition of SABMiller and is considered one of the largest fast-moving consumer goods (FMCG) companies in the world. Sadly however, Chibuku might not be joining those ranks.

We will not speculate as to why InBev would consider not taking on Chibuku. A look at its 2016 annual report shows that bulk beer maker was steadily increasing turnover year on year. For example from 2015 to 2016 revenue increased by 15% with shareholder funds increasing by 12% in the same period. However, operating profit has been eroding over the last 3 years largely due to macro forces and competition in the sector. Could this be the reason for dumping Chibuku? Hard to say. However, judging by NatBrew Managing Director Annabella Degroot’s statement to shareholders on the completion of their new plant indicating renewed installed capacity, whoever lands this asset will make the most of its profitability potential.

There are many reasons a legacy player such as AB InBev would not buy Chibuku. For instance, an audit of its portfolio of beverages shows that it does not have a single opaque beer in its roster. Extant knowledge is key in this game. Conversely, observers in the market would have expected InBev to add Chibuku to its category of local champions (InBev classifies its brands in the following categories Global Brands,International Brands, and Local Champions). For now, we can only wait as Deborah Bwalya NatBrew’s Company Secretary indicates that the impact of the strategic review cannot yet be ascertained, and shareholders will be updated as required pursuant to Zambian law.

Sharing is caring!

(Visited 20 times, 1 visits today)
The information contained on this website is for general information purposes only. While we endeavour to keep the information as accurate as possible, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or subject companies or matters contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.