Profits or Losses: Conflicting Revenue Figures from Alcohol Producers amid COVID-19 Impact
When the government closed bars in March and other strict COVID-19 measures imposed, more people actually bought alcohol and beverages, at least going by figures from the biggest industry player.
However, as The Chronicles reports, the deeper story gives a gloomy picture of the industry. Some alcohol and drinks producers have seen production drop by as much as 50%, followed by job losses.
For a clear sense of what is going on, we sought for data from five local companies – some producing both alcohol and beverages. Their products range from beer, spirits, wines, packaged local brews, to juices and sodas.
Brasseries et Limonaderies du Rwanda or BRALIRWA, which opened in 1957 and currently also a Heineken Group affiliate, produces the global brand Heineken beer. For Rwanda, it offers the locally popular PRIMUS beer, Mutzig beer, Amstel, Affligem Beer, and different Coca Cola products.
In 2009, Brasseries des Mille Collines (BMC), entered the market with SKOL beers, and also a subsidiary of UNIBRA, a Belgium-based firm. Today, SKOL Brewery Ltd (SBL) produces different beer types of Skol, also Skol GATANU, VIRUNGA beer, and Skol Panache, a fruity tasting drink.
SINA GERARD/Ese URWIBUTSO, owned by well-known businessman Sina Gerard, makes nearly anything; different wine types, packaged local brew Akarusho, juices, biscuits and the renowned pepper Akabanga.
Testament to his impact in Rwanda, Sina has slowly turned his home village into a bursting town ‘Kwa Nyirangarama’, situated along a major highway heading to DR Congo. No vehicle passes here without stopping. As a result, Sina is said to be one of the richest Rwandans.
The Uganda factor
Recent entrant into the alcohol and beverages industry is INGUFU Gin Ltd, which makes different gin products such as NGUVU Gin, Red Waragi, Rabiant gin, Club whisky and King’s Vodka.
There is also Speranza Group Ltd (SGL), which has been around for about five years. It makes different liquors and gins such as Speranza WARAGI, Super GIN, Golden SHERRY, Coffee RUM, Millenium Hills WHISKY, Blue Hills VODKA and Super GIN No 1.Speranza Group Ltd operates from the Special Economic Zone in Kigali.
Drinks by INGUFU Gin Ltd and Speranza Group Ltd (SGL) may not be found in upscale urban areas, but they are very popular in upcountry towns and rural areas. Their drinks are very cheap and have considerable alcohol volumes, both major factors when low income earners are choosing what to drink.
Both INGUFU Gin Ltd and Speranza Group Ltd (SGL) gained market share following Rwanda’s still ongoing fallout with Uganda which began in February last year 2019. Since then, different imported gins including the international brand Uganda Waragi became rare and very expensive. So many gin lovers turned to local brands.
The other reason these two companies have been attracting a growing market is the government’s uncompromising stance on local crude brews like Kanyanga, Urwagwa or Ikigage. Police seizes thousands of litres weekly, all of which are poured away. Many people have gone to jail for making or consuming these banned brews.
Before the COVID-19 pandemic struck globally, no specific study was available as to the market share of these five alcohol companies. The common understanding is that BRALIRWA dominates, followed closely by SKOL.
For seven months now, bars and fan joints are closed. But unofficial data suggests alcohol consumption has actually gotten worse, as many people battle depression. Since many employees are still working from home as both private and public sector limits how many staff can be in offices to maintain social distance, every day is drink day for many.
Drink to ‘kill problems’
In this early September, BRALIRWA announced it had made a whooping Rwf3.9bn profit after taxes in the first half of 2020 – representing a 70.6% growth in profit compared to the same period last year.
However, the company also admitted that for the period ending June 30, 2020, the company’s volume and revenue decreased respectively by -3.4% and -5.4% mainly due to the impact of COVID-19 pandemic.
BRALIRWA released its own figures, which were actually audited, since it is publicly traded. Its figures caused stampede on social media, as users gave varying explanations; most saying it was expected since people have nothing to do and also need to ‘kill their problems’.
SKOL refused to comment or release any production figures. A communications officer, to whom we had been referred, instead told us: “The information you are asking for is not shared with outsiders.”
The Chronicles, however, was able to get some details from its regional distribution centers, which gives idea as to how the pandemic restrictions have impacted SKOL’s business.
SKOL Brewery Ltd is said to have divided up its market distribution chain into six regions which are Rubavu covering western Rwanda, Musanze covering northern, Huye for the south, Nyagatare for east and Kigali as a stand-alone – where its production plant is located.
Each of these regional distribution centers covers several other districts, at least four, which neighbor it.
To protect our source, we will not reveal exact regional branch which shared its data with us. This region received and distributed at least 2,000 Hectolitres monthly before COVID-19, which is estimated to be around 20,000 creates.
However, when the virus hit and the country went into silent mode, literary, this particular region has been receiving 800 Hectolitres monthly.
In other words, as par figures from this SKOL regional branch manager, in the months during the COVID-19 lockdowns, quantity distributed in that region reduced by up to 60%. Gin and spirits not doing too badly
It suggests that SKOL production and distribution across all regions, except maybe Kigali, may have significantly dropped during the period when its bigger competitor BRALIRWA made more cash.
The other explanation for BRALIRWA beating the odds and actually making more money, could be linked to the fact that it has more beer choices, including Heineken and Amstel, which are preferred among the urban elite. It also has that PRIMUS, highly preferred for decades. In fact, for long, before SKOL arrived on the market, PRIMUS was called in local vocabulary as “BIERE”, which means beer in French, but was simply tagged on PRIMUS.
Skol Brewery Ltd was awarded by government as the second best taxpayer in 2018.
Last year in May, SKOL launched a $10m packaging line, which it claims is the most efficient filling plant in East Africa. The new line increased the Kigali brewery’s bottling capacity from 450,000 hectolitres to more than a million hectoliters annually.
Speranza Group Ltd’s revenue between June and December 2019 was Rwf 3.8 billion. But between January and July this year – when lockdowns were in effect, revenue has dropped to Rwf 2.8 billion, according to Amon Mugume, the company’s commercial manager.
Before COVID-19, Speranza Group monthly production was 48,000 cartons equivalent to 1,186,560 litres.
Today, monthly production has decreased to 34,000 carton equivalent to 854,600 litres.
“Our main customers are Rwandan middle and low income earners, and less. We also have exports to DRC and Tanzania,” said Mugume.
Like other manufacturing firms, Mugume also confirmed that production costs have increased lately as materials needed now cost more.
Tycoon Sina Gerard said as a result of the pandemic, Ese URWIBUTSO production has dropped by over 50% and he has had to cut employees. He declined to share revenue figures or any other details.
INGUFU Gin Ltd, which operates from Southern Rwanda, did not respond to information requests.
As par the latest measures announced by cabinet last week, bars and entertainment joints still remain closed. Restaurants can serve alcohol, but to clients waiting for food order. You cannot enter a restaurant just to drink alcohol.
The night curfew now runs from 10pm to 5am.
You can still buy as much alcohol as you want and drink it from your home. If you host a party in your home and the authorities find out, which they usually do anyway, you may be arrested and fined, or even all of you put into an isolation facility for 14 days at your own costs and later tested for COVID-19.