BRALIRWA maintains stable consumer prices amidst economic challenges

Despite challenging economic conditions that characterized the year 2013 for the Rwandan market and particularly for the country’s leading beverage producer, BRALIRWA, the company’s products suffered no significant price fluctuations during the period.

According to Jonathan Hall, the Vice Chairman of the Board of Directors and the Managing Director of BRALIRWA, maintaining market prices for the company’s mainstream beers and soft drinks brands is a reiteration of the confidence it exhibits for the Rwandan economy.

“The business context in 2013 proved challenging as the economies of the East African region were impacted by a combination of factors,” Mr. Hall stated.

Nonetheless, he added that “despite depreciation of the Rwanda Franc exerting upward pressure on costs (especially of raw materials), price increases to consumers were restricted to the smaller premium beer brands Mutzig, and Amstel. There was no price increase taken on mainstream beers or soft drinks.”

Based on the 2013 results statement, the year for BRALIRWA was characterized by increased investment in expanding and upgrading production lines, innovation to build stronger brands, in addition to evolving and developing its people and organization to ensure that the company continues to lead and win in Rwanda’s competitive beverage market.

Investments included the expansion of the brewery’s soft drinks production lines in Kigali and the extension of the beer lines at the Gisenyi plant.
All the investments are believed will strongly boost the company’s production capacity and in so doing best position to supply sufficient quantities to quench market demand currently and in the medium term future.

These investments have been ongoing for the last two years and the company’s management confirms that the efforts will continue forward going.
Also, BRALIRWA’s investments in the recent past were directed into local production of raw materials in a bid to reduce the company’s exposure to currency fluctuations which oftentimes play a key part in inflating its expenses.

In the regard, Rwanda’s leading beverage company by market share, in 2012 went into partnership with grain miller MINIMEX, a duo that resulted into the creation of BRAMIN farm in Ndego Sector in the Eastern Province of Rwanda.

BRAMIN is a modern farm for both seed and commodity maize in addition to soya beans.

BRALIRWA uses a lot of maize in the production of its beers while the soya beans are sold to Mount Meru SOYCO, a vegetable oil producing company in Kayonza district of Rwanda’s Eastern Province.

BRAMIN Farm which is estimated to be providing over 150 jobs to local farmers in Ndego Sector commenced its first season in early 2013 has already had its first harvest which Mr. Hall noted was a “promising reap”.
For a long time, BRALIRWA served the Rwandan market as the only beer producer. However in the recent past, economic and political stability in Rwanda has attracted various regional players into the country’s beverage market, a development that Hall acknowledged as a step forward into the right direction of building a strong beverage industry and economy as a whole.

“The recent competition gained from foreign players joining the beverage market in Rwanda is a good thing that as a matter of fact has helped us to have good and strong partners to compare ourselves against and therefore harness our innovativeness to the benefit of the Rwandan consumer and economy,” he noted.

A flashback to the year in review reveals a mild increase in BRALIRWA’s gross revenue of 2 percent  from Rwf114.934 billion in 2012 to 117.215 billion while featuring a 14.2 percent decline in profit before income tax from 24.861 billion to 21.320 billion during the same period.

The decline in the company’s profit is attributed largely to increased cost of sales to a tune of 9.9 percent as a result of increased raw and packaging materials costs, energy costs, currency depreciation, and an increase in depreciation charges following the investment programme commenced in 2012.

In 2012, BRALIRWA commissioned a USD40 million investment in expansions and upgrades of the soft drinks and beers plants in Kigali and Gisenyi respectively.

2014 appears promising

Following a turbulent year 2013 when the Rwandan economy suffered various hits from the international community in aid cuts among others, all of which impacted by slowing economic growth significantly, 2014 is already showing promises of a better comeback.

According to BRALIRWA’s MD, the first quarter of 2014 has showed a relatively high growth trajectory compared to a similar period in 2013 raising anticipations that the year will see more growth for Rwanda and the brewery in particular.

“We have seen positive signs for increased growth this year based on the first quarter but it is still early to write off challenges that may come up in the remaining days,” Mr. Hall shared.

The persistent challenge that Rwanda’s leading brewery will have to carry on into 2014 however are instabilities in its largest export market of the Democratic Republic of Congo which reflected negatively on the company’s sales.

“Export volumes declined by 29 percent largely due to increased duties raised by the DRC,” Hall offered.

But as challenges in the DRC market avail as solutions are still being sought, BRALIRWA is already keen on finding ways of penetrating other regional markets particularly Uganda, Tanzania and Kenya where the company believes that its high quality products will undoubtedly find a niche in the highly competitive neighboring countries.