Diageo-controlled Guinness Ghana Breweries has swung to net losses for its most recent fiscal, with beer sales constrained by higher taxes and problems with infrastructure.

Guinness Ghana Breweries today (4 October) reported net losses of GHS4.64m (US$3.25m) for the 12 months to the end of June, compared to profits of GHS4.58m a year earlier. Financial charges more than tripled during the year, overshadowing an increase in both net sales and operating profits.

Sales rose by nearly 3% to GHS206.5m, while operating profits rose by 48% to GHS21.78m, defying tough market conditions.

The firm’s accounts show that the higher financial expenses were related to interest charges. These are thought to be related to increased borrowings due to a shortage of foreign currency available in Ghana.

just-drinks understands from a source close to Diageo that there has been frustration at the organistion of infrastructure in Ghana.

“Ghana faced a difficult year as water shortages and power outages reduced production volume, while a significant increase in excise duties in January negatively impacted consumer demand,” said Diageo in its full-year results statement in August.

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Just as Diageo found in Nigeria during the fiscal year, sales rose in Ghana in spite of lower demand for its flagship Guinness beer. Consumers switched over to local lagers, which were around 75% cheaper than Guinness on average. However, price rises and higher marketing spend are thought to have held up Guinness net sales, despite pressure on volumes.

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