Sechaba, govt negotiate over alcohol levy
Pauline Dikuelo | Wednesday July 27, 2016 11:45
Since the introduction of the alcohol levy about seven years ago, government has been increasing the alcohol tax by five percent every year with the intention of reducing harmful impact of alcohol.
Initially government intended to increase the levy year on year till it reaches 70%, something that Sechaba thought would do more harm to their business.
Briefing the media yesterday, the group Managing Director Johan De Kok said they decided to approach the government since the yearly increase was affecting their business.
“The levy was having a major impact on our business hence why we decided to engage the government on the way forward,” he said.
De Kok said the intention of the engagements that have been going on for about 18 months is to come to terms with the government about the alcohol levy adding that they hope to come to a conclusion by next week.
“We have requested that all alcohol with a percentage greater than five percent should be levied at 55% while the ones under five percent should be levied 50%,” said De Kok.
The MD said he is optimistic that they will reach an agreement that will favour both parties.
Following the rigid trading hours for liquor outlets and nightclubs, the government introduced the 30% alcohol levy in 2009. The move angered the Kgalagadi Breweries Limited (KBL) and Botswana Breweries Limited (BBL) who responded to the assault by launching a legal action against the government to stop the levy. In the urgent application, the two companies accused government of being more interested in arbitrary decisions than the consultative process. Three months following the introduction of the levy, KBL could feel the impact as they announced a 20% decline in sales.
In addition, the MD noted that the water and electricity shortages last year affected their business, especially the opaque beverages that went down by 16%.
In a year, clear beer, which accounts to 31% of the group’s portfolio went up by 7.9% with the increase, attributed to the 750ml bottles, which showed a six percent growth. Castle light grew by four percent while St. Louis is on the road to recovery with the brand finishing nine percent up.
Alcoholic fruit beverages showed a significant growth due to the ongoing demand for the Core 660ml and category expansion into Red’s.