Producing Heineken beer in the country will reduce Bralirwa’s high import bill, which is pilling pressure on the company’s earnings and pricing.
The price of a carton of 24 disposable Heineken bottles costs Rwf24,000 ($27) at depots, but is set to drop Rwf16,000 ($18), according to dealers, making it affordable to many consumers. The Heineken beers will be packaged in returnable bottles, which are cost effective.
Industrial analysts say the low pricing could attract more consumers as its price is expected to drop from and an average of Rwf1000 ($1.12) to Rwf800 (0.9) per returnable bottle.
“We believe this move will create additional business opportunities for Bralirwa and for our business partners through exports to neighbouring countries,” said Victor Madiela managing director of Bralirwa.
East African Breweries Ltd, which has been in the country for the past three years, is the third largest player in the beer market. Analysts estimate that EABL controls five per cent of the local beer market and over 95 per cent of the spirits market.
Bralirwa reported that its sales declined by 222,000 hectolitres, from 1,784,000 hectolitres in 2016 to 1,562,000 last year and this is partly as a result of growing competition. The brewer projects tougher prospects in the coming years as competition heightens and fewer units are sold.
The brewer’s 2017 full-year results show its net profits have been falling, from double digits in the twelve months to December 2013 to a single digit. Bralirwa’s net profits plummeted from Rwf12.5 billion ($14 million) in 2013 to Rwf1.3 billion ($1.5 million) in 2016. However, the share price has started recovering, and is currently trading at Rwf150 ($0.17) in the first ten months to November, after the brewer took austerity measures to protect its revenues.
The Rwanda plant is the ninth for the Heineken Group in Africa after Nigeria, Namibia, South Africa, Algeria, Morocco, Egypt and Ethiopia.
Emmanuel Hategeka chief operating officer of Rwanda Development Board expects Bralirwa’s production costs to drop sharply. “The only items that will be imported are bottles and other ingredients,” he said.