Although alcoholic beverages sales volume at Kgalagadi Breweries Limited (KBL) increased by 8.6 percent for the year ended 31st March 2012, the effect of the levy on the company’s performance cannot be taken lightly because much of the company’s outstanding performance was due to growth of its Non-Alcoholic Brands (NAB).
According to Sechaba Brewery Holdings Annual Report for the year ended March 2012, the Non-Alcoholic Brands at both Kgalagadi Breweries Limited (KBL) and Botswana Breweries Limited (BBL) continue to show increases, with the juice category recording growth of 101 percent on the back of Minute Maid Juice and Nectar products.
The Source bottled water brands continue to show strong growth with volumes increasing by 25 percent while Mooka Mageu recorded growth of 8 percent.
Supply problems were indicated as the reason behind the weak performance by the Bonaqua brand. Sechaba Brewery Holdings Limited is an investment company with interests in KBL and BBL.
In his report, Chairman of Sechaba Brewery Holdings, Edward Komanyane, said that even though the 40 percent alcohol levy continues to impact negatively on sales volumes, the revised levy calculation method, which came into effect in November 2011, and saw the levy increased from 30 to 40 percent has removed unfair competitive advantage that previously had been enjoyed by importers of alcoholic beverages under the old calculation regime as a result of which the company had given up some of its market share.
“Despite the continuing difficulties brought about by the alcohol levy and associated restrictions on trading in alcoholic beverages, combined with the effects of a slow economic recovery, the performance of Sechaba Brewery Holdings Limited has continued to improve and show positive results,” said the Managing Director of Sechaba in his report.
According to the Chairman’s report, Sechaba Holdings continues to support any efforts directed at combating the irresponsible consumption of alcohol.
“However, the company still maintains that the implementation and the sustained increase in the alcohol levy is not the right solution and that this is not only bad for business but has unwanted social consequences such as the proliferation of unrecorded home-brews and other cheap substitutes,” said Komanyane.