Beer migration unlikely – Nambrew
While many observers were expecting Namibia Breweries Limited to migrate the production of its beer beverages to its Sedibeng plant in South Africa, Namibia Breweries has instead decided to make an effort to ensure local beer production despite the fact that the Namwater central area is heading for a disastrous water shortage.
This is what its Financial Director Graeme Mouton indicated in a recent conversation with the Economist as he outlined Nambrew’s mitigation strategy which rests on migration, the use of locally grown barley and finding alternative sources of water.
“Namibia Breweries Limited’s efforts to create its own water resources, which includes the drilling of two on-site boreholes and one off-site borehole, in addition to its ongoing projects such as a water reclamation plant and a pre-treatment plant will cost between N$20 million and N$30 million, and is expected to reduce the company’s dependency on public water resources by between 70% and 80 % by July this year, said Mouton. Most of the planned investment he mentioned would be attributed to the pre-treatment plant.
Added Mouton, “with our current water contingency plan in place we don’t foresee any further migration taking place, [and] therefore no impact on employment.” A recent statement released by Namibia Breweries stated that Nambrew’s solid results for its half-year ended 31 December 2015 were driven by growth earnings despite volume migrations to South Africa. In an effort to understand how Nambrew viewed and defined volume migration, the Economist requested a meaningful definition.
Responding, Mouton reiterated, “volume migration referred to in the financials is what was migrated last year already before the water crisis, as part of the arrangement between Namibia Breweries Limited and Heineken with regards to creating greater efficiencies in the businesses,” dismissing any notion that volume migration to Sedibeng was on the cards. Nambrew did not provide any figures on the exact volume of beer production migrated to Sedibeng in the previous financial year.
When asked about the adoption of local barley in the use of its existing malt beverages, Mouton explained that the absence of malting facilities and limited production of local barley made it improbable to use local barley. He also provided an update on the progress of Nambrew’s new baby, King Lager was making. “Because the harvesting of the home-grown barley project is still in its infant phase with limited production, coupled with the lack of malting facilities, we are not in a position yet to use home-grown barley in other NBL products.” Added Mouton, “King Lager is still a small brand in the NBL Portfolio. The brand is gaining traction and achieved distribution in 37% of the NBL beer outlets. We are confident that King will continue to grow significantly in the near future.”