Tuesday, October 27, 2020

Liquor industry takes a hit, again

Botswana’s multi-billion-pula lucrative liquor industry’s recovery from a decade of restrained growth has been put on hold by tight restrictions from the government as it seeks to curtail the spread of coronavirus in the country. 

Though Botswana is yet to report its first confirmed case of the COVID-19 virus, the landlocked country has moved swiftly to implement movement restrictions, announcing travels bans and closing liquor dealing establishments.

Peggy Serame, the minister of Investment, Trade and Industry, this week stunned the country’s elbow benders, instructing that alcohol should not be sold for a period of 30 days commencing April 1, a move intended by the state to control movement and reduce error of impaired judgement when it comes to precautions set in place to slow the spread of the virus. The sale restriction followed other measures released last week, including the temporary closure of bars. 

The government’s restrictions will weaken the local liquor industry which was recovering from former president Ian Khama’s administration that in 2009 introduced the alcohol levy, which steadily rose over the years until it hit 55 percent in 2018. When president Mokgweetsi Masisi took over in April 2018, he made some changes that were embraced by the liquor industry: extending operating hours of liquor dealing outlets and slashing the alcohol levy down to 35 percent. 

The improvement to the industry was almost immediate, with Botswana’s top brewing company, Sechaba Holdings, reporting a more than 100 percent  in profit in its interim results ended June 2019. The company management attributed the growth due to the reduction in the alcohol levy, which led to more volumes being sold. 

While the liquor industry is still figuring how it will stay afloat during the restrained trading environment, Sechaba dropped a bombshell of its own, taking the market by surprise after announcing that its last year profit has taken a hit. 

On Wednesday, the Botswana Stock Exchange listed brewer issued cautionary trading statement to its shareholders, warning them that pre-tax profit for the year ended December 2019 will be between 10 percent and 15 percent lower than the P224.6 million recorded in December 2018. 

The company said it will provide full details surrounding the fall in profit when it releases the financials before the month ends. 

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