Despite the Coronavirus-induced lockdown that has seen the closure of bars for almost two years now; the just-released financial results for Uganda Breweries Limited indicate that the revenues for the beer company grew by 33% in the year 2020.
In March 2020, government imposed a total lockdown of the country in a move aimed at controlling the spread of Covid-19 and among the facilities closed were bars.
Whereas on several occasions the lockdown has been eased, bars and entertainment places where a big percentage of the population enjoy beer have remained closed, to the detriment of beer companies whose sales have gradually gone down.
However, despite such a situation that has had a big toll on the entire economy, UBL says their revenues grew by at least 33%.
According to the company, the tough operating environment has seen the brewery turn to creative e-commerce partnerships to improve distribution channels, partnering with Jumia and Safe Boda to deliver products to customers as well as embraced e-marketing by channeling unprecedented marketing budgets to online platforms to speak to customers who due to lockdowns are spending a lot more time on line.
“This has ensured that our consumers conveniently access the entire UBL product portfolio at the right price and quality during this period,” the beer company said.
The beer company which celebrates 75 years of operation this year says the 33% growth in revenue was driven by their flagship beer and spirits including Bell Lager and Uganda Waragi respectively as the business adapted quickly to the times to respond to changing consumer shifts.
The beer and spirits both recorded double-digit growth.
UBL also says that the positive results are also a result of heavy investment in capacity expansions in packaging lines and filtration plants at Uganda breweries which have increased production efficiency.
The UBL Managing Director, Alvin Mbugua admitted that the Coronavirus lockdown had a toll on their sales and subsequent revenues.
“The closure of bars and entertainment venues, and other restrictions necessitated by measures to curb the spread of the COVID -19 pandemic, affected not only our customer base but also led to both local and global supply disruptions, for our produce and for raw materials that we need in our production processes,” Mbugua said.
Illicit trade, tax burden
The beer company also mentioned illicit as one of the other ways that led to a reduction in their revenues in the years 2020.
“We continue to engage government and other stakeholders to improve the operating regulatory and tax environment as well opening up dialogue with the different stakeholders to identify and tackle issues rising from illicit trade, key of which is cost of revenue to the government through missed taxes,”Mbugua said.
He added that a 30% levy on beverages produced using local raw materials is steep considering the annual investment the industry makes in farming communities in Eastern, Northern and South Western Uganda where Uganda Breweries alone contributes more than shs30 billion annually.
According to a report by Euro Monitor International, a market research firm, in the year 2020, due to the ongoing pandemic and restrictions on gatherings, as well as pubs and bars closures, consumption of illicit alcohol recorded increased growth and accounted for 64.7% in volume terms in 2020.
This accounts for 50% of all alcohol market value, growth from 31% in 2017.
Officials from UBL say there is therefore need for the government to widen its tax base by extending taxation and regulation to this market.