National Alcohol Policy could hit tax revenue

National Alcohol Policy could hit tax revenue
Delta chief executive officer Pearson Gowero and finance director Matts Valela

Delta chief executive officer Pearson Gowero and finance director Matts Valela

BEVERAGE giant, Delta Corporation, says certain positions that could be adopted by government under the National Alcohol Policy would negatively impact its business and state tax revenues.
Government, citing rising cases of alcohol abuse, plans to regulate consumption of alcohol which would outlaw the sale of alcoholic products during certain days, hours and to pregnant women.
The National Alcohol Policy is set to be tabled in Cabinet soon.
Delta says while it participated in the drafting of the policy, certain clauses, if adopted, could affect its revenue.
Delta, the largest company on the Zimbabwe Stock Exchange by market capitalisation, is also one of the biggest tax contributors to government.
Delta’s company secretary Alex Makamure told The Financial Gazette on Tuesday that despite the National Alcohol Policy containing clauses that were not friendly to their business, the beverage industry was still keen on dialogue with government.
“Delta participated in the drafting of the national alcohol policy. Obviously, there are certain positions adopted by the authorities that would negatively impact on producers and retailers of alcoholic products,” Makamure said in response to questions from this paper.
“There are opportunities to strike a balance between the various competing interests of the varied range of stakeholders.”
Delta is an integrated beverages company with a diverse portfolio of local and international beer brands as well as Coca-Cola-franchised sparkling and non-alcoholic beverages. It has investments in associate companies, whose activities are in cordials and juice drinks, wines and spirits.
The policy, among other issues, proposes to bar the sale of alcohol during the week, regulate the number of hours to sell the products and provide guidelines on the consumption of alcohol during special events like parties and weddings on the basis of the venue they are held.
The policy also proposes that any alcohol advertisement should be done not less than 100 metres from a road intersection, school, clinic, hospital, church and old people’s homes.
The policy also proposes amendments to other legislation to give the police power of enforcement. The document also seeks to amend the tax system to levy alcohol products in proportion to the alcoholic volume and not on the type of beverage.
Prices of alcohol products in Zimbabwe are not gazetted by government, but are controlled by suppliers. Delta is currently trading under a cautionary since October 2016 arising from the notice received from The Coca-Cola Company (TCCC) of its intention to terminate its agreements with Delta subsidiaries. This follows the merger of SABMiller and AB InBev.
“We recently advised the market that the discussions on the way forward are progressing slowly. Any engagements between Delta and TCCC are in this respect,” Makamure told The Financial Gazette.
Last month, Delta Corporation said its sorghum beer volumes for the quarter to September 30, 2017 were down three percent, affected by cash shortages in the main markets. Sorghum beer, which traditionally records high sales volumes as it is a low margin product, had also recorded a four percent volume decline for the six month period to September.
Lager beer volumes grew 11 percent above prior year for both the quarter and six months with a mix in favour of value packs and brands benefitting from improved disposable incomes driven by agriculture and small scale farming.
Sparkling beverages volumes declined one percent for the quarter and closed flat on prior year for the six months while mahewu volumes went up 12 percent and 19 percent for the quarter and six months respectively. Revenue was up one percent for the quarter and two percent for the six months.

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