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Awethu thirsts for expansion capital
LISTING
SORGHUM beer and mageu (fermented porridge) brewer, Awethu Breweries, will list on the JSE next month to raise funds to finance growth opportunities in the sorghum beer and other related liquor industries. Awethu, which operates two breweries in Welkom and Carltonville, also mills maize, flour and wheat. The brewer will raise R12-million through a preferential offer of R1.5-million and a public offer of R6.5-million at 100c a share. A further R4-million has been raised from financial institutions who oversubscribed from the offer, said Rob Schuter, a director at merchant bank SCMB. MD Daryl Sahli says Awethu is a niche player in the sorghum beer industry dominated by the troubled National Sorghum Breweries and SAB subsidiary Traditional Beer Investments. Awethu focuses on the price-sensitive bottom end of the sorghum beer market. To keep the cost of its product affordable, Awethu does not pack the beer in expensive 1l cartons but sells in bulk, mainly 20l drums and the 2l plastic bottles, through its franchise network of 230 outlets in Gauteng townships. It also supplies sorghum beer to the mining industry. Awethu prescribes the price at which the retail outlets can sell its product. Awethu originated in 1986 as a bulk supplier of mageu to the mining industry. Its current owners, including a private equity fund run by Capital Partners, bought the company in 1992 and expanded to sorghum beer in 1995. Awethu's strategy is to grow its franchise network, which is projected to increase at 25 outlets a month. It has projected sales of R42-million for the year to end June 1998. It produces 30-million litres of sorghum and 43-million litres of mageu a year. Sahli puts the sorghum beer market at 2.3-billion litres a year, comprising 600-million litres of commercially brewed or wet-base, 1.5-billion litres of home brewed sorghum beer and 200-million litres of dry-base or sorghum beer powder.
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