Sechaba seeks way around tough regulations
Isaac Pinielo | Wednesday November 16, 2016 19:00
Group managing director, Johan de Kok noted in the group’s unaudited results for the half-year ended September 30, 2016 that the challenges faced by Kgalagadi Breweries Limited (KBL) as a result of the traditional beer regulations have continued.
“The company continues to find the appropriate routes to market within regulations,” he said. KBL is a subsidiary of Sechaba Brewery Holding and is involved in the manufacturing, importation, distribution, and marketing of a range of clear beers, alcoholic fruit beverages, soft drinks, purified water, opaque beer and other non-alcoholic beverages.
The alcohol levy regulation was amended effective April 1, 2016. The levy rate for alcohol content of five percent and less was changed to 50% and for alcohol content of five percent and more remained at 55%.
Additionally, the levy on locally-produced alcoholic beverages was changed to include duty payable in terms of Customs and Excise Duty Act. De Kok pointed out that total volumes for the period under review ended at 0.1% below the prior year.
He said clear beer showed growth of six percent while alcoholic fruit beverages, sparkling soft drinks and traditional beer showed a decline compared to prior year.
“The decline in the financial performance of the company is mainly attributable to the current regulatory challenges environment in which the company operates,” the MD said.
The government’s repeated efforts to reduce alcohol consumption levels and crimes related to it by implementing liquor regulations since 2008, saw reduced trading hours being introduced.
Under the regulations, bars only open at 2pm to 10pm from Sundays to Thursdays, while on Fridays and Saturdays, the bars open at 12pm until 11pm.
Amongst all the negative effects that were predicted when the regulations were imposed, the most lethal was the possible closure of KBL, which had more than 45,000 people on its value chain.
The predicted impacts turned out to be much worse as the KBL resorted to closing down one of their operations, the Palapye plant in 2012. It was also reported that some of the companies that operated in Botswana lost their value, clients and employees.