Namibians buy less beer

Namibia Breweries Limited (NBL) has reported a decrease in their beer sales during the first half of 2024, despite the company’s interim results showing a net revenue increase of 15% to N$2,1 billion.

This was driven by price increases and the successful introduction of the Distell portfolio. Beer sales decreased by 13,7%.

“Revenue from beer sales in Namibia decreased, compounded by a decline in revenue contribution from South Africa due to aggressive competitor pricing,” the report states.

The company acquired Distell in April last year.

According to the results, the export markets provided a bright spot, with contributions increasing as hard currency availability improved.

Windhoek Lager is leading the export volume growth.

Operating profit decreased by 13,8% to N$310 million compared to N$359 million in 2023.

“Despite challenges in the trading environment, NBL placed significant focus on cash management over the last six months.

“This came on the back of obtaining additional financing to acquire Distell, which placed specific focus on effectively gearing NBL’s financial position and leveraging the expanded portfolio to optimise cash generation in the short term,” the report says.

Operating expenses rose by 21,9%, primarily due to the expanded portfolio.

Net cash flow from operating activities increased to N$482 million from N$199 million in 2023, while net cash outflow from investing activities of N$160 million was recorded.

“Despite making investments to upgrade its existing production facilities and expand to support local cider and wine production, NBL saw an increase in its cash balances over the past six months,” the report states.

Capital expenditure was recorded at N$181 million, up from N$157 million in 2023, for the six months.

The board declared a first ordinary interim dividend since May 2021 at 150 Namibian cents per share.

“This underscores our financial health, commitment to delivering shareholder value, and confidence in our strategic direction for sustained growth,” the report says.

Additionally the board has announced the change of the company’s financial year-end.

“The company’s financial year-end will change from 30 June to 31 December with immediate effect. The reason for the change is to align NBL’s financial year-end with that of Heineken,” the report says.

According to Namibia Breweries’ 2023 integrated annual report, there was a strong return to pre-Covid-19 levels in the period since the pandemic ban on alcohol was lifted.

While drinkers worldwide are opting for low or non-alcoholic beverages, Namibians are reported to be countering that trend, with market research showing a strong return to full-strength beers and spirits after the pandemic alcohol ban was lifted.

“This stands in contrast to the global trend of younger consumers opting for a sober-curious lifestyle, with major brands launching new zero-alcohol lines. Globally, we see no or low-alcohol beverage segments growing, but Namibia seems to counter the trend,” the report says.

According to the report, the Namibian beer market is already saturated, with limited growth potential.

The focus for brewers will be on premiumisation, encouraging consumers to trade up to more expensive brands for a higher-value experience.