ZAMBIAN Breweries (ZB) increases clear beer prices

The upward adjustment which does not affect its Sorghum based Eagle Lager follows an increase in excise duty on clear beer from 40 per cent to 60 per cent that the Government recently announced as part of the 2014 National Budget.

This means that an increase will make Zambian beer the most expensive in the region.

In a statement issued in Lusaka by ZB corporate affairs director Luke Njovu the company said that in order to mitigate the smuggling that would result as a result of having higher beer prices, it has for the time being decided to absorb the excise duty increase on its non-returnable packs.

ZB envisages that that this measure will reduce the detrimental effects that the excise duty increase will have on local manufacturing.

The company noted that since it will continue paying excise tax on non-returnable packs, the increased excise duty will be an added direct cost to the product type and would therefore detrimentally affect company profitability.

ZB managing director Anele Malumo said: “Excise duty on beer is a consumer tax that we collect on behalf of the Government. As a business we do not pay the tax on behalf of consumers, and we are therefore, merely passing it on. This is exactly what we did back in 2010 when the Government reduced the excise duty rate from 60 per cent to 40 per cent.”

Mr Malumo said the company back then passed on that full benefit of the excise adjustment to consumers through price reductions.

“Since that excise rate reduction in 2010, we paid over K976 million in excise duty and VAT remittances to Government to March 31, 2013 to our annual sales of clear beer grew by 31 per cent between April 1, 2010 and March 31, 2013.

During this period, when the excise duty rate remained stable at 40 per cent, we have demonstrated restraint in adjusting beer prices resulting in real price reduction of 4.2 per cent between 2010 and 2013,” he said.

Since March 31, 2008, the company has made a total capital investment of US$382 million in its operations.

The company has also invested US$98 million in building a new breweries in Ndola and a further investment of US$ 32.6 million in a malting plant in the Lusaka South Multi- Facility Economic Zone (MFEZ) as part of its local sourcing barley programme in support of Zambia’s agricultural development.

Times of Zambia