Job losses loom in KBL-BBL merger

Brian Benza
Staff Writer | Wednesday March 13, 2013 00:00

 

KBL which manufactures clear alcoholic beverages employs 545 workers while the opaque beer brewer, BBL has 425 staff. Due to changes in the business environment, mainly the pressures on sales of alcoholic beverages induced by the alcohol levy, the management of the two brewing firms last week announced an amalgamation process that will see them coming together as a single operating entity.

Group managing director, Hloni Matsela has told Mmegi Business that while the ideal situation would be to minimise job loses, in some situations, this would be unavoidable as the brewers seek to reduce duplications by streamlining operations. 'We will endeavour to minimise having employee redundancies, make provisions to ensure that as many as possible have a role to play in the integrated organisation and that this process does not disadvantage any of our employees. Whilst this is the ideal, engagement with employees is on-going with all efforts being made to avoid job losses as employees will be assimilated into the new company,' he explained.

The amalgamation process, which is expected to be completed early next month, will see the integration of BBL and KBL's back-office functions, particularly key support departments to reduce duplication of work and lower the administration costs of running separate operations. Matsela said this will provide opportunities for centralised procurement, materials management and supply chain, therefore providing better and effective use of assets.

After the amalgamation process, the surviving entity, KBL will operate four divisions that include manufacturing, distribution and sale of opaque beer and soft drinks. BBL will be deregistered and will be removed from the roll of companies. KBL and BBL are both 60 percent owned by Botswana Stock Exchange (BSE) listed Sechaba Holdings.The remaining 40 percent interest in the companies are owned by global brewing giant, SABMiller.

 After the amalgamation, which has already been approved by the Competition Authority and the BSE, Sechaba will hold 60 percent in the new KBL entity with SABMiller holding the rest.  The alcoholic beverages industry has been under pressure since the introduction of an alcohol levy in 2008, a situation that was compounded last year with the imposition of the new traditional beer regulations, which has further knocked down sales.

Looking ahead, Matsela said that they expect the challenges in the operating environment to persist with pressure on sales and profit margins. 'Our challenge has been to contend with the sustained regulatory interventions over the year, the latest being the traditional beer regulations, which have negatively impacted sales volumes and profit over the years. We anticipate this decline to continue as more initiatives against the industry are introduced in the future,' he added.