In July 2012, the then Minister responsible for Trade, Dorcus Makgato, introduced a new law governing the sale of traditional beer in Botswana. Five years after these controversial trade regulations, reports have emerged that shebeen owners across the country are struggling to set up licensed depots.
On another hand, the country’s leading brewer, Kgalagadi Breweries Limited (KBL) is also said to be finding it difficult to extend a helping hand to the traditional beer traders. Shortly after the introduction of the traditional beer regulations, KBL, which produces traditional beers amongst its products, announced it’s Outlet Development Programme, solely meant to support the shebeen owners set up licensed depots upon being awarded commercial land. The programme was intended to facilitate a seamless relocation of home sale business to commercially zoned areas.
The Communications Manager at KBL Masegonyana Madisa admitted this week that five years down the line, the project has had limited success.
“The development of the retail outlets has floundered mainly on implementation obstacles involving land acquisition, zoning and licensing issues. It is worth noting that where commercial land was availed, the application for land change use towards beer retail was more often than not unsuccessful,” Madisa said.
The failure, Madisa says is mainly due to the requirements of Traditional Beer Regulations which stipulates that bars and depots ought to be 500 metres from such facilities as schools, churches and main roads.
During her various meetings with shebeen owners around the country in 2012, Malesu said that the traditional beer regulations were geared at protecting the silent majority who were affected by the soaring social ills brought by shebeens.
At the time of introduction, the regulations were met with resistance from shebeen owners who viewed the government as cold and unsympathetic towards their livelihood. A number of politicians especially those from the opposition parties also condemned the government for lack of proper consultation before imposing the regulations.
On how these Traditional Beer Regulations affected KBL up to now, Madisa said the highly regulated environment generally led to a decline in overall volume performance, which includes , volume decline, shift in consumer drinking patterns. He further said that lower than optimal production volumes continue to detrimentally impact economies of scale.
“Following the highly regulated environment with the advent of the alcohol levy and Traditional Beer Regulations, two Chibuku Production Plants were closed in Palapye and Lobatse. Furthermore one distribution Depot was closed in Selibe Phikwe,” he said.
He said the opaque beverages volumes which were mostly affected have since declined by about 40 percent since 2008 to date
Madisa said in terms of retrenchment as result of the closure of the various sites, 112 employees were affected out of a possible 371 roles or positions. He however said the business managed to retain 259 employees who were suitably reassigned to new roles and areas across the business. He said currently KBL has 860 permanent employees.
Asked on reports that KBL might close business in Botswana due to the unfavorable business environment, he simply said while they cannot comment on such speculation, KBL remains an important element of the AB InBev Africa.
“Following the business combination between AB InBev and SABMiller, the business has aligned its traditional structures with the broader AB InBev business structures. This exercise is about strategic alignment and organizational re-design. The process followed careful review, analysis and consultations regarding our current configuration in order to ensure the appropriate organizational design,’ he said.
Kgalagadi Breweries Limited is owned by Sechaba Brewery Holdings at 60 percent shareholding. Botswana Development Corporation (BDC) and South African Breweries (SAB) have limited ownership in both companies; BDC has 25.59% in Sechaba, SAB holds 40% control in KBL, and owns 11.3% of Sechaba.