Soft drinks rebound to hit fastest output in five years

Production of soft drinks rebounded by 16.82per cent in the first five months of this year, the fastest growth in five years, buoyed by gradual easing of safety measures imposed to curb the spread of Covid-19.

Kenya National Bureau of Statistics (KNBS) figures show that production of drinks, such as soda, increased to 253,406 million litres in the five months to May, reversing a slump recorded over a similar period in  2020.

Beverage firms recorded production of 216,915 million litres between January and May 2020, a drop from 281,532 million litres registered over a similar period in 2019.

The January-May 2021 production performance is the highest since 2017, raising hope for manufacturers in the sector that was hit hard by Covid-19 containment measures, which included closure of restaurants and bars, also banning social gatherings.

This affected events such as parties and weddings, thus lowering uptake of soft drinks.

Faced with reduced cash due to job losses and pay cuts, many households reduced consumption of items such as soft drinks that are deemed non-essential.

Beyond  the Covid-19-fuelled drop in soft drinks consumption, there has been a general hit on soda intake by a segment of consumers, who now prefer healthier vitamin-rich juices.

These factors made 2020 a tough year for firms, with KNBS data showing soft drinks output between January and December fell by 80.4 million litres—the first slump in nearly a decade—bucking an annual increase trend since 2012.

Beverage firms recorded production of 550.6 million litres in 2020, compared to 630.9 million litres in the previous year.

For example, beverage maker Coca-Cola, whose portfolio includes Sprite and Fanta,  recorded a 13 per cent drop in net operating revenue to post Sh3.5 billion in 2020, down from Sh3.9 billion in 2019.
Operating revenues

“Covid-19 lockdowns put tremendous pressure on all retailers, particularly small, independently operated stores in high-density urban areas that depend almost solely on foot traffic,” Coca-Cola noted in their annual company report.

The company typically generates net operating revenues by selling concentrates and syrups to authorised bottling partners, who combine the concentrates and syrups with still or sparkling water and sweeteners — depending on the product —  to prepare, package, sell and distribute finished beverages.

With Kenya's economy posting a remarkable recovery in the second quarter of 2021 on relaxed health safety restrictions, the performance of the beverage sector is projected to improve this year—handing a boost to manufactures.

President Uhuru Kenyatta on October 20 lifted the night curfew after a sharp decline in infections and hospital admissions reported in the preceding weeks.