ZAMBIA – Zambian Breweries Plc has slashed beer prices by 8.6 per cent on regular glass bottles of Mosi, Castle and Carling Black Label.
The reduction in the recommended retail price would see a returnable Glass Bottle (RGB) of Mosi, Castle and Carling Black Label costing K6 from K6.50.
The reduction is effective from yesterday.
Zambian Breweries managing director, Annabelle Degroot, said the move to slash the prices was necessitated by a drop in sales last year after the company increased prices following the tax changes on clear beer.
The government announced a 50 per cent increase in excise duty on clear beer from 40 per cent to 60 per cent as part of the 2014 National Budget.
“This resulted in our beer becoming too expensive for a significant part of our consumer base, leading to a mainstream beer volume decline of approximately 23 per cent on prior year since 1st January 2014,” Degroot stated.
“As a result, the business has suffered a 28 per cent decline in profitability, reduced employment by 120 full time positions, reduced the Barley crop by 6000 tonnes and has put US $40 million of capital investment on hold.”
She stated that the company has however taken a long view and rolled back the prices of its mainstream beer.
“While this will place further pressure on our financial results and will reduce tax remittances to the government, we believe it is necessary in an effort to kick start the industry and return to volume growth over the long term,” Degroot stated.
Meanwhile, company spokesperson, Luke Njovu, said the slash in price would not put immediate pressure on the company’s supply side.
“The move will see a high uptake but we do not see demand outstripping supply,” Njovu said in an interview, citing the company’s increased supply since the Ndola plant came on stream.
But Degroot noted that following the company’s US $100 million investment in the Ndola plant, Zambian Breweries still needed to increase output.
“Likewise, the company hopes to increase barley throughput through the new US$32.6 million malting plant to justify the investment. The plant is currently under construction in the Lusaka South MFEZ and is part of Zambian Breweries’ local sourcing barley programme in support of Zambia’s agricultural development,” stated Degroot.
January 20, 2015; http://postzambia.com/news.php?id=5497#sthash.6166SWp6.dpuf