KBL said on Friday its Opaque Division was “seriously” considering the closure of their brewery operations in Palapye. The KBL Opaque Division (formerly Botswana Breweries; BBL) has four breweries based in Gaborone, Francistown, Lobatse and Palapye; with its core activities being the manufacturing of alcoholic and non-alcoholic beverages.
Generally, the entire KBL Opaque Beer portfolio has suffered sustained challenges in its trading environment as a result of the Traditional Beer Regulations that were implemented in July 2012 to formalise the trade; effectively banning the sale of traditional beer in residential areas [that previously represented approximately 80 percent of trading channels for KBL Opaque Beer Division’s products]. Other factors that ultimately contributed to this untenable situation relate to licencing issues as well as the unavailability of land to set up Chibuku depots.
KBL said the Palapye Brewery has fared consistently worse off than others and the consideration to close down the operation follows the tough reality that despite all efforts by the business to mitigate, and with performance steadily falling well below break-even point, a decisive approach was necessary for the entire business to remain sustainable and profitable to ultimately deliver to shareholder expectations.
Palapye Brewery that employs 57 people suffered a dramatic reduction in volumes and sales due the impact of the Regulations and consequently, a good number of employees often remained idle due to the inevitable down-scaling of production to match changes in demand. Efforts will be made to try to absorb as many of the affected employees as possible at both the KBL Opaque and Clear Beer sites across the country.
This process is currently on-going and the final headcount for those who may ultimately have to exit the business will be communicated to the relevant stakeholders. Recently, consultations have taken place with Union representatives as well as employees at the Palapye Brewery [who also played a critical role in trying to turn the situation around over the term]. In the past KBL has repeatedly raised concerns it could not rule out the possibility of job losses as a result of the Traditional Beer Regulations and their impact on the opaque side of the business.
KBL Managing Director, Johan De Kok, said as to be expected in any business, management’s responsibility is to be proactive in taking timely steps to cushion the business and reduce the chances of the overall bottom line performance from following a continuous decline.
“This responsibility extends to our affected employees; to ensure that we can do the best we can to save as many jobs as possible, through negotiating a feasible redeployment to other areas of the business (where possible).”
“As in the past and as the business continues to feel regulatory and other external shocks, we will do all we can to minimize employee redundancies; whilst also accepting our limitations where such measures prove unsustainable,” he added.
According to reports from KBL, current performance at Palapye Brewery has declined significantly when compared to performance prior to the implementation of the Regulations. Unfortunately, this situation has worsened despite all efforts by the business to mitigate; hence in the case of Palapye Brewery, the business has had no choice but to signal proceedings of Section 25 of the Employment Act (Cap. 47:01) which refer to the possibilities of impending retrenchment under redundancy.
KBL reiterated that efforts will be made to secure some of the Palapye Brewery staff members in other sites for both clear and opaque beer. However, for those employees who will not be absorbed, then exit may ultimately be a reality. The route to be taken, referred to as mothballing, is such that, if things do improve, the situation will be accessed and the Palapye Brewery could be re-opened, said De Kok. The Palapye operational area will then be supplied from Francistown and Gaborone Breweries.