Rwanda’s biggest brewer, Bralirwa, experienced a 37.6 decline in after-tax profit in 2015, from Rwf11.394 billion ($14.7 million) posted in 2014 to Rwf7.106 billion ($9 million).

However, sales revenue grew by 9.5 per cent while total sales volumes increased by 7.6 per cent, a trend attributed to growth in soft drinks sales, which grew by 5.3 per cent, and beer sales up by 5.3 per cent.

The depreciation of the franc for the most part of last year also affected the brewer, as it imports a large chunk of raw materials used in the manufacturing of its products, and it also suffered currency translation costs while importing packaging materials.

The company also made investments in manufacturing plants, such as a brewery in Gisenyi and a soft drinks plant in Kigali, using debt and internally generated funds. The depreciation of the franc increased the net financing costs, which they have been incurring for the past four years.

“To compensate for this level of increased cost at a time when currency depreciation has impacted on raw materials and other costs is a challenge, particularly as passing on costs to the consumer may not deliver value said Jonathan Hall, the vice chairman of the board of directors Bralirwa Ltd.

“Despite strong sales and revenue, growth margins have remained under pressure in 2015 resulting in lower levels of profitability,” he added.

No price increases have been made on soft drinks in the past four years, while the prices of mainstream beer portfolio were last increased in 2011.

The decision by the Democratic Republic of Congo government to protect its local brewers by increasing taxes on imported beer, also affected the company, as DR Congo used to be its biggest export destination.

After the introduction of the tax increase, Bralirwa’s export sales fell by 29 per cent, and it seems the brewer is yet to recover from the impact.

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Between 2012 and 2012, total revenues earned from export of beer from Rwanda to DR Congo were between Rwf27 billion ($35 million) and Rwf40.8 billion ($53 million).

Bralirwa is now finding it difficult to compete with more established brands in the region such as East African Breweries Ltd from Kenya and Nile Breweries from Uganda.

The emergence of local brewer Skol and its increasing market share in the country is also putting pressure on Bralirwa.

The political instability in Burundi, which was another key market for the brewer, has impacted its sales volumes.

The brewer, known for its beer brands Primus, Mutzig, Amstel and Turbo King, and Heineken, which is imported from Holland, made a Rwf42.25 billion ($54 million) capital investment in the Gisenyi brewery and the Kigali soft drinks plant and bought irrigation equipment for its 260 hectares of maize.

Bralirwa’s results, released last week, show a 37.6 per cent rdecline in earnings per share, for basic and diluted, and a 33.3 per cent decline in dividend per share.

With the recent addition of Southern Sudan as an official member of the Northern Corridor, more competition is expected for Bralirwa, which Mr Hall however insisted will enable them to grow. “Competition is not a threat to us; it’s an opportunity for us to improve and grow,” he said.