TBL | Tapping the untapped
As the market leader in Tanzania (c.72% market share in the formal alcohol market), we believe Tanzania Breweries Limited (TBL) is well positioned to benefit from improving economic fundamentals, rising consumer confidence and favourable demographics. TBL has historically followed a price-setting strategy, resulting in no volume growth but high operating margins (average of c.36% vs c.25% for EABL) over the past five years. However, the Group has shifted towards an affordability strategy, which focuses on growing volumes. Despite unnatural weather patterns affecting H1'18 results (operating profit declined 17% y/y), we expect the Group's affordability strategy to support the increase in per capita consumption in Tanzania (where consumers remain price sensitive). By taking market share from the illicit market, we forecast TBL to generate double-digit revenue growth over the next five years.
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