Bralirwa, Rwanda’s largest brewer and soft beverage company has unveiled a plan to increase the production of brewing inputs from within the country to cut down on foreign exchange spent on importing the same. This follows a huge decline in the profit margins that fell by 80.3% last year where the company earned over Rwf 1.3 billion profit in 2016 compared to more than Rwf 7.1 billion in 2015.
The sales of drinks, in total, reduced by 1.4%; from 1,809,000 in 2015 to 1,784,000 hectoliters in 2016.
In a press conference yesterday, the Managing Director of Braliwa Victor Madiela unveiled three major reasons that triggered the decline of the firm’s performance.
“The first is monetary depreciation in Rwanda which seriously affected prices of our raw materials. As you know, 60% of our materials are imported. These include malt, sugar and labels. We pay for them in hard currencies which don’t often face depreciation like Euros or Dollars,” he said.
Madiela attributed the second cause of profit margin decline to investments Bralirwa has been making for years, building the plant’s capacity for long term benefits. In 2012, Brwalirwa invested $41million in its Gisenyi brewery branch and Kicukiro soft beverage branch in Kigali city. It also involves the project of manufacturing soft drinks packaged in plastic bottles.
He explained that the other cause of margin decrease is related to Rwanda’s monetary depreciation citing the price of investment along with obtained loans when the value of a dollar is low yet payments of the loan extend even the dollar value is increased.
Bralirwa got a USD 35 million loan of which 25 million came from International Finance Corporation (IFC).
Plans to raise profits
Madiela has explained that several projects were made while others are being undertaken promising to bring in better tangible results. He unveiled that raising costs for drinks which have been constant for five years will be part of initiative to boost revenues.
“Firstly, we increased prices of soft drinks from August last year and alcoholic drinks in January,” he said.
“Secondly, we are revising our internal spending mechanisms. It doesn’t mean we will stop releasing money but will be more frugal,” he added.
Madiela pointed out an example where Bralirwa has cultivated a large piece of land in Kayonza district in collaboration with MINIMEX under BRAMIN project to produce maize used in brewing. He said that Bralirwa uses 40% of local products but targets 60% by 2020.
Madiela unveiled that some cereals including wheat are still imported but have started planting them in Rwanda and had the first harvest last year.
The brewer will also unveil new drinks to create diversity and boost profitability.