The Uganda Breweries Limited (UBL) recorded 33% revenue growth over the last year despite the Covid-19 lockdown leading to closure of bars.
According to the UBL financial report, the growth was driven by their flagship brands, Bell Lager and Uganda Waragi, as the business adapted quickly to the times to respond to changing consumer shifts.
UBL attributes the positive results to heavy investment in capacity expansions in packaging lines and filtration plants, which have increased production efficiency
Growth was also driven by the business’ agility in response to the changing consumer shifts and emerging channels. The business also invested in capacity expansion to support sales growth in line with EABL’s strategy.
But Alvin Mbugua, the UBL managing director, said this growth would have been higher if the bars had not been closed.
“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.
He added that the tax burden bore by the regulated and licensed alcohol beverages sector and the illicit and unregulated sector continues operating tax free continues to eat into the profit margins of the industry.
“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.
Going forward, Mbugua said the 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 Shs30billion annually.
According to a report by EuroMonitor 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.