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East African Breweries Sees Lingering COVID Concerns After Strong First Half

By Dave Simpson

East African Breweries is cautiously optimistic about the prospects for its second half, its chief executive has said, adding that the threat posed by the COVID-19 pandemic is not over.

Jump In Sales

The firm, which is controlled by Britain's Diageo, posted a 23% jump in sales during its first half to the end of December, as Kenya and Uganda lifted restrictions on crowds that were put in place to curb the spread of the virus.

"Challenge Of COVID Is There"

"The threat, the challenge of COVID is there," CEO Jane Karuku told Reuters in an interview, citing the emergence of new coronavirus variants like Omicron and a relatively low vaccination rate in East Africa.

New Production Plant And Expanded Facilities

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EABL, which was established in Kenya 100 years ago and now operates in neighbouring Tanzania and Uganda, is investing in a new production plant and expanding existing facilities to maintain the growth momentum from the first half, she said.

Online Purchase Platform

The company, which spent 6.2 billion shillings ($54.63 million) in capital expenditure during the first half, is also investing in technological infrastructure to make products available to consumers through an online purchase platform.

"People are still concerned about their health, so they don't want to go to crowded places," Karuku said.

Growth Driven By Sales Of Mainstream Beers And Spirits

EABL's rapid growth in the first half was driven by sales of mainstream beers such as Tusker, and spirits, including Johnnie Walker whiskey, Gilbeys gin and Chrome vodka, the chief executive said.

Tax Increases

Tax increases by governments that are pegged to the annual inflation rate, however, are a threat to the business since it could lead to a reduction in sales volumes, Karuku said.

"The tax policy needs to be looked at," she said, adding that government taxes usually equate to half of the company's gross sales value.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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