Sechaba Brewery Holdings Limited has decided to engage government and negotiate the application of the alcohol levy on its products. The Levy has had a negative impact on the company’s overall earnings in the recent past.
The company hosted a media and analysts day on Tuesday to brief participants about the company’s financial performance for the year 2016 and future prospects.
The common denominator in the briefing was how the alcohol levy has impacted the company in the past and also the likelihood of future negative impacts, as the government is set to increase the levy going forward. The brewery giant hopes to convince the Ministry of Investment, Trade and Industry to engage in a discriminate increase of the levy as a sweeping increase will greatly affect their business.
Sechaba, the local brewing behemoth, said that a new levy was gazetted with the effect date of the first of April, continuing a trend that spans seven years since the introduction of the alcohol levy.
The levy which was introduced in 2009 by President Lt Gen Dr Ian Khama at 30% is now at 55% after successive increments of 5% each year for the past 5 years. The alcohol levy has since inception channelled more than P1 billion as revenue to the government, and the levy’s total collections is expected to breach the P2 billion mark by the end of 2016.
The levy which has become an easy money making scheme for the government is once more expected to raise tempers as the latter and Sechaba face off in negotiating the new calculation method which is expected to have a negative impact on Sechaba’s performance.
It has since been revealed that negotiations are ongoing and that there is mutual understanding between the government and KBL, an associate of Sechaba, on the impact of levy. The final proposals on the new calculation are expected before end of this month.
“We have requested that all alcohol with a percentage greater than 5% should be levied at 55% while the ones under 5% should be levied 50%,” said Johan De Kok, Sechaba’s Managing Director.
Sechaba Brewery Holdings recently reported an 8.5% increase in profits for the year, which was underpinned by increases in sparkling soft drinks and clear beers volume growth. The total volume growth was down by 0.2% after the opaque beverages registered a decline of 16% in volume growth. In terms of volume contribution, sparkling and soft drinks enjoy the largest share of 34%, followed by clear beer at 31%, while the struggling opaque drinks contributes 29%. The Non Alcoholic Beverages (NAB) and Alcoholic Fruit Beverages (AFBs) contribute 4% and 2% respectively.
While the alcohol levy continues to impact the overall performance of the company, the company managed to push the clear beer volume performance by 7.9%, this was despite the out of stock constraints which affected the overall performance considerably. The company highlighted that the growth was driven by the success of the 750ml Returnable Glass Bottle bulk pack at 6% and the phenomenal success of the 440ml Can. Carling Black Label continued to be KBL’s flagship brand with a growth of more than 16% on previous year. Castle Lite volume grew by 4% while the local brand St Louis Lager is on the road to recovery as the brand finished 9% up from previous performance.
Sparkling and Soft drinks registered a solid performance of 6.8% despite the popular coke brand suffering a slight decline. The company says the market share of sparkling and soft drinks was under pressure due to the success of imported products. The opaque beverages suffered the steepest loss as their performance went down by as much as 16%. The decline in volumes was the result of water and electricity challenges which impacted production.
However, the company was pleased with performance in the Northern region where their Chibuku brand is popular and continues to show growth through the 2L and 1L cartons which constitute 97% of the opaque product range. Sechaba is bullish about the 2017 financial performance based on the recent stability and predictability of water supply.
Alcoholic Fruit Beverages (AFBs) pulled an impressive performance, registering growth of 95.7%. The strong showing in performance was driven by the increasingly popular Redds Lemon Vodka while another local brand Core Original played a critical supporting role. Other contributing factors to the strong performance was the preference for the AFBs’ 660ml pack, new product launch and the recovery of Redds Apple which had initial failed to pick momentum.
For the year under review, the Company’s capital expenditure (Capex) was up 33% as the company spent P206.5 million to acquire and upgrade physical assets. The notable increases in spending were largely reserved for introducing new bottle lines, warehouse extensions, production expenditure, fleet replacement and expansion. Sechaba expects to spend more on Capex for the 2017 financial year, with focus on new bottle lines, beer powder expansion, containers, fleet, technical capex and other expenses.
Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.
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Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.
The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.
Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.
“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.
He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.
Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.
“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.
He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.
He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc
“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran
Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.
“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.
Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that the BIE provides a fertile environment where they can meet, share ideas and grow professionally.
“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.
He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.
“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams
He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .
Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.
“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.