Zambian Breweries Plc. has announced an increase in the recommended retail price of its clear beer alcoholic beverages by 16% on its Returnable Glass Bottle (RGB) pack, excluding sorghum-based Eagle Lager, taking effect January 1st 2014.
This follows the 50% increase in Excise Duty on clear beer from 40% to 60%, which the government recently announced as part of the 2014 National Budget - an increase that will make Zambian beer the most expensive in the region.
As a result, in order to mitigate illegal smuggling that would result from higher beer prices relative to its regional peers, which was caused by the increase in excise duties, the company has, for the time being, decided to absorb the excise increase on its non-returnable packs. Zambian Breweries Plc. believes that this measure will reduce the detrimental effects that the excise duty increase will have on local manufacturing. The company, however, notes that since it will continue paying excise tax on the non-returnable packs, the increased excise duty will be an added direct cost to the product type and will therefore detrimentally affect company profitability.
Making the announcement, Zambian Breweries Plc. Managing Director, Mr. Anele Malumo, said: "Excise duties on beer are 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% to 40%. Zambian Breweries Plc. then passed on that full benefit of the excise adjustment to consumers through price reductions."
"Since the excise rate reduction in 2010, we have paid over K976 million in Excise Duty and VAT remittances to the government as of March 31st, 2013, as our annual sales of clear beer grew by 31% between April 1st, 2010 and March 31st, 2013. During this period, when the excise duty rate remained stable at 40%, we demonstrated restraint in adjusting beer prices resulting in a real price reduction of 4.2% between 2010 and 2013."
