ACCRA, July 13 (Reuters) - Beer sales in Ghana dropped 18 percent in 1997, but, undeterred, some of the world's biggest brewers are lining up to pour money into the country.
Since last October, three companies, Guinness, Heineken and South African Breweries have pumped about $30 million into the brewing sector.
``Per capita consumption is less than five litres per year, while people in neighbouring Ivory Coast and Togo down eight or nine litres,'' said Steve Wilkinson, managing director of Guinness Ghana Limited.
``Ghanaians like beer as much as their neighbours do, but presently they can't afford it,'' he said.
At 880,000 hectolitres in 1997, Ghana's beer market is small but industry analysts agree it has great potential.
Yofi Grant, an investment banker with Databank Financial Services Ltd in Accra believes the economy is the key.
``If government sustains its current direction as regards stabilising the economy, the coming years are going to be very interesting for the breweries,'' he said.
``Beer will become more affordable, volumes will go up and it seems the breweries have confidence in Ghana's economy as they are investing heavily,'' he added.
Wilkinson of Guinness expects annual growth in the beer market of of five to 10 percent in the next three years, if inflation continues to come down.
``In 1995 we had 20 percent growth in the beer market, but in October 1996 we had to increase the price to keep up with inflation and demand fell dramatically,'' he said.
Year-on-year inflation currently stands at around 20 percent, down from 48.4 percent in July 1996.
The other big problem is tax.
In 1996 Ghana's breweries paid 58 billion cedis ($25 million) in excise duties and 22 billion cedis in sales tax. Total turnover in the industry was 176.7 billion.
The government has shown some sympathy, and beer duty was cut earlier this year to 65 percent from 75.8 percent. That meant another price increase was averted but the reduction was too small to have much impact on sales.
Seth Ayree, commercial manager at Accra Brewery Limited, said sales could jump more than 20 percent if the excise duty was cut 20 percent.
Failing such a reduction, Aryee predicts ``not much growth'' in the coming three years.
``It's suicidal. The average Ghanaian cannot even afford one bottle a day with the daily minimum wage standing at 2,000 cedis,'' he said.
The government-controlled price of a bottle of 0.625 litres of lager is 1,650 cedis.
The brewers may be complaining, but at the same time they seem to be positioning themselves for an upturn in the market.
Last October, Heineken paid around $7 million for the loss-making Achimota Brewery Company Limited (ABC), with its one-million-hectolitres a year brewing house.
This month, it merged the business with Kumasi Brewery Ltd and shares in the new Ghana Breweries Limited (GBL) will replace Kumasi on the Accra bourse from mid-July.
Heineken has made available some $4 million in investment funds for GBL, even though the group already has total brewing capacity in Ghana of 1.3 million hectolitres a year.
The company is market leader with 45 percent of total sales.
Also in October, expanding South African Breweries bought a 51.12 percent stake in Accra Breweries Limited from Swiss Overseas Breweries Limited for an undisclosed sum.
Accra Breweries has capacity of 700,000 hectolitres and, with over 250,000 hectolitres sold in 1997, has 29 percent of the market.
The company made a net profit of 2,360 million cedis in the year to March 1997 after 601 million in 1995/96.
Aryee would not reveal his company's plans for the future, except to say that the South African owners were ready to take on the opposition.
Meanwhile, Guinness has just begun a 15-month, $17.4 million programme to expand its brewing capacity to an annual 450,000 hectolitres, a 50 percent increase on the present 300,000 hectolitres.
In 1996 it invested $10 million in a computerised bottling line, bringing bottling capacity to 400,000 hectolitres.
With a market share of 26 percent, Guinness Ghana made a net profit of 11.8 billion cedis in 1996, up from 8.1 billion cedis in 1995. Its return on capital is 27 percent.
``We are forecasting more profit growth. As soon as we have the capacity we will introduce new products,'' said Wilkinson.
``The economy is a big factor. A lot depends on the government's policy to further reduce inflation, currency depreciation and duties,'' he added.
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