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Bralirwa lists on the Rwanda stock exchange

By the independent team

The opening of the Initial Public Offering on 23rd November 2010 of Rwanda’s largest company Bralirwa Ltd, the beer and sparkling beverages company was a major achievement for the budding Rwanda Stock Exchange. This is the first time a local Rwandan company will be listing on the country’s stock market; the first two having been cross-listings by foreign companies – KCB and Nation Media from Kenya.

Bralirwa whose full name in French is Brasseries et Limonaderies du Rwanda has led the beverage industry in the country since 1959 when the first Primus beer was sold to a consumer. With over 50 years on the market, Bralirwa brands have become synonymous with Rwandan society. The Government of Rwanda is selling its equity stake of 25% in the Company’s shares to the public through this IPO. This is in form of 128, 570,000 shares at 136 Rwandan francs per share with a minimum of 100 shares per application at 13,600 francs. The offer for sale runs from 23 November to 17 December 2010. The BRALIRWA share offer is part of the Government’s privatization programme, and serves to help develop and promote a savings and investment culture amongst Rwandans by broadening citizens’ shareholding of public enterprises.

Access to long term capital will become a reality when the culture of widespread ownership of shares and other financial assets becomes a norm among the population. It is for this reason the Government identified the capital market as a channel for long term savings mobilization and an opportunity to promote public ownership through the privatization programme.

The IPO came on the heels of two major international reports that gave Rwanda distinctions for its reforms in creating a favorable environment for doing business. The first was the World Economic Forum’s Global Competitiveness Report where Rwanda debuted and came as the most competitive economy in Eastern Africa and fifth best in the whole of Africa.

The second was the World Bank’s Doing Business Report which showed Rwanda as the world’s leading reformer in creating a climate facilitating business. Rwanda jumped 10 places from 67 last year to the current number 57 position. It is the … in Africa.

In an exclusive interview with The Independent, Bralirwa Managing Director Sven Piederiet gave an overview of the company. He said Bralirwa will sell over 1.3 million hectoliters (130m liters) of beer and sparkling beverages in 2010. Beer takes a larger share of this at about 90m; sparkling beverages 40m liters.

According to Sven Piederiet, the company employs 528 persons permanently and has more than one thousand workers daily on company sites when outsourced and temporary workers are added. Bralirwa is the biggest company in Rwanda by revenue with gross revenues last year of RwF 72 billion, (US$127m). Net profit in 2009 was Rwf 6.3 bn francs (US$11m) and this year is expected to be Rwf 8.1 bn (US$14m).

As the country’s most well known and profitable company, listing on the capital market it expected to boast its standing as the first IPO.  The company principally produces, distributes and sells beer and sparkling beverages. On Monday 22nd, the government said it expected to generate 22.1 billion Francs in the capital markets privatization initiative. Its 25% stake was listed for public offer while the other 5% was sold to the Heineken group.

In the last four years, the company has enjoyed its best ever period with steady increase in profits, Net Profit showed a average annual growth of 56% in the period 2007-2009. The 50th anniversary in 2009 was a huge event in the country. New products have come into the market within the last two years. Turbo King beer in October 2009 and Fanta Fiesta in May 2010 have been well received and other imported sparkling beverages like soda in plastic bottles have been added to its product portfolio.

The sparkling beverages portfolio includes; Coca-Cola, Coke Zero, Fanta Orange, Fanta Lemon, Fanta Fiesta, Sprite, Krest Tonic brands of The Coca Cola Company and Vitalo Eau Gazeuse a Bralirwa brand.

Historical background

The then Belgium group which was operating in Congo wanted to build a brewery in Goma to serve North Kivu and Rwanda-Urundi. The fear of a volcanic eruption saw the plant shifted to Gisenyi just across the border from Goma. Heineken then was part of the process as technical consultants while the company was owned by the Belgians. In 1957 construction of the Brewery in Gisenyi on the shores of Lake Kivu commenced.

“Even then,” Piederiet said, “the possibility of exploring methane gas in Lake Kivu as a source of energy was being considered. In 1959, the then King, (Umwami) of Rwanda officially launched the brewery with the Primus brand rolling off to the market.

Between 1972 and 1990, Heineken gradually acquired 70% shares becoming the majority shareholder. Between 1976 and 1979 the government of Rwanda acquired a 30% stake in the company.

In 1974, a major milestone was achieved when the company starting to produce sparkling beverages under the The Coca Cola Company license.  And a production plant for sparkling beverages was established in Kicukiro, Kigali.  Piederiet said; “we have a production plant in Gisenyi were we make beer and sparkling beverages and a plant in Kigali for sparkling beverages only but with a store for beer”.

In 1987, the Mutzig brand was introduced targeting higher end consumers with a taste for European-style beer. In 1989 Guinness production under license started, followed by local production of Amstel in 2006. The Heineken brand is the only imported beer of the Bralirwa portfolio.

Bralirwa boosts a nationwide distribution system for its brand portfolio. With seven distribution centers namely in Butare, Cyangugu, Kibuye, Ruhengeri, Kibungo, Byumba and Nyagatare, points from which the Bralirwa products are sold to the clients.

At the beginning of the year, a local competitor emerged producing Skol brand which has just taken 3% of market volume. Bralirwa commands a market share of 94% for industrial beers and a market share of 99% for sparkling beverages.

Bralirwa is the largest tax payer in Rwanda  with expected tax payments in 2010 of RwF 43bn which is between 11-12% of domestic tax revenues. This is mainly through excise duties which are at 60% for beer and 39% for soft drinks.

Corporate responsibility

Bralirwa enjoys a good image sponsoring a number of sports significantly the Primus Football League, while Mutzig sponsors golf and Heineken sponsors tennis. Bralirwa is among the main sponsors for events and activities related to culture and music, for instance Fespad.

During the 50th anniversary festivities the company announced the building of a secondary school in Rubavu district for an amount of USD 425,000. Furthermore, Bralirwa is funding the set up of local production capacity of mosquito bed nets for an amount of USD 800,000. The first 140,000 nets will donated to the Ministry of Health.

Bralirwa is supporting agriculture through growing maize which is sold to a maize milling company which then provides maize grits for Primus and Mutzig beers. A project is being executed to establish a model maize farm in Kayonza, Eastern Province. This will be a fully mechanized modern farm with state-of-the-art irrigation equipment, the first of its kind in the country.

In a bid to protect the environment, sustainable use of energy and water and reduction CO2 output is part of the company mission. The company has also invested in a waste water treatment plant for its sparkling beverages plant in Kigali. As Piederiet states: “Sustainability is an integral part of our mission and hence of our daily lives. Every member of the Bralirwa family has the responsibility to do their jobs in a sustainable way”.

Bralirwa is involved in promoting positively the role of beer in society. To encourage responsible consumption of alcohol, a ‘don’t drink and drive’ campaign is currently underway. “As an alcohol producing company, we have the responsibility to pro-actively support responsible consumption of alcohol” emphasized the Managing Director. This is making consumers aware of the effect of alcohol on their bodies and behavior, and discourage the abuse of alcohol and underage drinking.

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