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Sechaba to engage Gov’t on Alcohol levy

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.

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Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020
SEFALANA MD: CHANDRA CHAUHAN

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Solid demand for diamonds towards the ‘gift’ season

30th November 2020
Diamonds

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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