Players in the alcohol sector have once more asked government to prove beyond reasonable doubt that the current surge in COVID-19 cases in the country has any direct link to alcohol usage.
Last month, government moved to prohibit the sale of alcohol in the country, arguing the consumption of alcohol was the major reason cases of Corona Virus were on the rise. Kgalagadi Breweries Limited, the country’s biggest producer of clear and opaque beers has since taken government to court, calling for the ban on alcohol to be lifted as there is no evidence which suggests that the sector’s operation has fueled rising Covid -19 cases. KBL has since taken government to court on an urgent basis, calling for the ban to be lifted and allow the sector to trade again.
“The President has once more failed to prove in his responding affidavit that the alcohol sector is solely responsible for the surge in Covid-19 cases,” said an industry player in the sector which employs thousands of people around the country. “We find it strange that government is singling out the alcohol for the rise on Covid -19 cases, yet other sectors of the economy are in full operation and nothing is being said about them,” said Peter Noke, the Chairperson of Botswana Beverages Association during a recent press briefing. "As a sector, we have been compliant.
However, we are of the view that, there is limited law enforcement on the side of government. As an industry, we want the sector to open so that we can be able to monitor our members." The alcohol sector, which is already under distress due to the imposed Alcohol Levy, employs well over 50 000 people, excluding the over 200 000 people who depended on the sector. KBL, which is a subsidiary of Sechaba, a Botswana Stock Exchange, has in place a lot of initiatives which are aimed at ensuring safe opening of the sector. One such initiative, implemented by Botswana Alcohol Industry Association is ‘Di Nwele Dladleng', which encourages responsible home drinking of alcohol.
Players in the sector are questioning government real motives in closing the sector that pays millions of Pula in taxes annually. “We wonder why government is saying the sector is contributing to an increase on Covid -19 cases, yet since April last year, we have been operating on off-site consumption only. Up to this date, government has failed to name a single liquor outlet which has recorded Covid -19 case. We strongly believe government is using the alcohol sector as a scape goat,” said a concerned bar owner based in Gaborone.
Kgalagadi Breweries Limited, the country’s biggest producer, has, ‘every right to represent the alcohol sector, purely because of its dominant and influential position within the sector," independent sources have told Botswana Guardian this week.
“KBL is better placed to represent the sector’s interests. Any alcohol trader in Botswana, profits in one way or the other from KBL products,” said one liquor trader who refused to be named. KBL, which is a unit of Sechaba Holdings, has taken government to court following alcohol ban which government imposed last month.
However, in his responding affidavit, President Mokgweetsi Masisi has questioned why KBL is claiming to be representing the sector. “The applicant (KBL) avers that it has to bring this application on the basis that it has an interest in the end consumer having access to purchase beverages.
The said consumer is not part of this proceedings,” said Masisi in his affidavit. Furthermore, the President said KBL has no standing in representing wholesalers, transporters, retailers, among others. However, one source told Botswana Guardian that the President is ill-advised on the matter. “It’s surprising that the President says KBL cannot represent consumers and wholesalers yet he knows very well the chain in which alcohol products goes through, right from production up to the end consumer.
The reality is that all these sub sectors of the economy have been affected as a result of the alcohol ban,” said the source. The alcohol sector employs well over 50 000 people in addition to over 200 000 dependents of those who work within the sector. Through its Kickstart project, KBL has funded hundreds of young entrepreneurs. This week, KBL spokesman, Masegonyana Madisa confirmed that the Kickstart initiative has since been suspended as a result of current challenges that the sector currently find itself in.
The industry has had enough of the government’s big brother attitude of closing their businesses willy-nilly, oblivious to the damage caused to stakeholders involved, let alone, the economy. KOOBONYE RAMOKOPELWA picks up the lamentations echoing from the empty beer halls.
The decision to ban alcohol sales indefinitely is ill advised and shows that government is not taking into consideration that the sector, just like many others, plays a crucial role in the country’s economy. “Companies such as KBL (Kgalagadi Breweries Limited) play a very crucial role in the country’s economy. The company has invested heavily in Botswana, not forgetting the many employment opportunities it has created to many Batswana,” said one market player with knowledge of the alcohol sector.
The multi-billion-pula sector employs over 50 000 people, in addition to the over 200 000 people who are dependents. Government has banned the sale of alcohol without giving specific date when the sector will be re-opened. The government blames the sector for the rise on COVID-19 cases. “The alcohol sector needs to know when the sector will be opened. It beats logic why government has decided to announce date for the re-opening of schools following their closure while it has failed to do the same for the alcohol sector,” said the informant.
According to people familiar with investor attraction, government blanket closure of the alcohol sector and the tone of President Mokgweetsi Masisi’s responding affidavit clearly shows a government ‘with little interest to investor attraction’. Kgalagadi Breweries Limited is owned by AB InBev, a foreign company as well as government through Botswana Development Corporation. The informant further told Botswana Guardian that, Botswana government should take a leaf from the way South Africa has been dealing with the alcohol sector amid COVID-19. “While the South African government has in the past closed and opened the sector on account of COVID -19, there has always been certainty on when the sector will be opened,” said the source.
Meanwhile, the Chairman of Botswana Beverages Association, Peter Noke has lambasted government for closing the sector without consultation. “Our members are under distress as some have not opened for well over seventeen months. We need to be consulted as we are also a sector which contributes to the country’s economic advancement,” said Nokwe recently. Government closed the sector last month, arguing it is responsible for the rise on COVID-19 cases. “Why are we being singled out? Other sectors of the economy are open and nothing is being said about them when it comes to COVID -19 spread.” Said a concerned Nokwe, who runs the Marriot Restaurant in Gaborone.
Nokwe said they support KBL’s case against government on the closure of the sector indefinitely. In addition, the BOBA Chairman said, government has found it fit to close the liquor sector, but it has not found it fit to bail it out. ‘Someone can ask, where is the Alcohol Levy funds during times like this? We continue to pay rentals. Some of our members’ assets have been sold to pay creditors’. Meanwhile, South Africa has since reopened the alcohol sector after closing it for about a month. In Botswana, industry players are concerned that, more and more liquor will be imported from South Africa illegally in the process denying government the much-needed import duties.
KBL spokesman, Masegonyana Madisa has been quoted by Mmegi newspaper as having said the ban will exacerbate the illicit alcohol trade and criminality in the country as well as the consumption of unregulated and unsafe products, while diverting taxation away from the fiscus.
“KBL is asking the High Court to review the President’s decision to impose the ban by setting it aside, while also seeking orders declaring that the imposition of a complete ban on the sale of alcohol be deemed unlawful and improper,” he said. “The company believes that the government’s wholesale alcohol ban is improper and not based on clear and objective evidence demonstrating a causal connection between the wholesale ban on alcohol and the reduction of positive Covid-19 cases.
” Madisa said while KBL continues to support reasonable and proportionate emergency safety measures that respect the rule of law, “the latest ban compounds the matter as KBL has, once again, ceased trade, yet its fixed costs and obligations to employees and suppliers, also remain unchanged.” KBL was last year forced to put workers on unpaid leave, cut salaries across the board and also stop payments to suppliers as a result of the alcohol bans.
Asahi Group Holdings Ltd. agreed to buy SABMiller Plc’s central and eastern European assets from Anheuser-Busch InBev NV for 7.3 billion euros ($7.8 billion), in a move that catapults Japan’s largest brewer to third place on the continent. SABMiller is the parent company of Kgalagadi Breweries Limited (KBL), a listed company in Botswana, which produces popular beer brands like Castle Lite and St Louis.
Asahi expects the acquisition -- which spans five countries and includes beer brands such as Pilsner Urquell, Kozel and Tyskie -- to close in the first half of 2017, the Tokyo-based brewer said in a statement Tuesday. The deal would help Asahi position its overseas business as a growth engine to transform itself into a global powerhouse, it said.
The deal further strengthens Asahi’s foothold in Europe after the Japanese brewer agreed to pay 2.55 billion euros for AB InBev’s Peroni and Grolsch brands earlier this year. For AB InBev, the divestment brings it a step closer to meeting the antitrust commitments that allowed it to buy SABMiller for about $100 billion.
“We had estimated a value between $5 billion and $6 billion, so the price paid by Asahi looks pretty full and great for AB InBev,” Trevor Stirling of Sanford C. Bernstein said by phone. The analyst estimates Asahi will account for 9 percent of the beer sold in Europe, excluding Russia, after the deal.
Asahi shares fell 4.6 percent by the close of Tokyo trading Tuesday, the biggest drop since June. AB InBev rose as much as 1.5 percent in Brussels. A completed sale would bring some much-needed cheer for AB InBev investors, who had seen the stock slide 15 percent this year through Monday. In October, the brewer missed profit estimates for the sixth straight quarter, illustrating why it needed to acquire SABMiller.
The offer values the SABMiller assets at about 15 times Ebitda of 493.8 million euros for the year ended March 2016, according to Bloomberg calculations. That compared with the median of about 11.5 times trailing twelve-month Ebitda for 9 brewery acquisitions announced worldwide in the past five years, according to data compiled by Bloomberg. It would be the biggest by a Japanese company, surpassing Kirin Holdings Co.’s acquisition of Australia’s Lion Nathan Pty in 2009 for $3.4 billion including debt, according to the data.
Deutsche Bank AG and Lazard Ltd. advised AB InBev, while Rothschild & Co. and Barclays Plc advised Asahi.
The $21 billion Japanese beer market is stagnating, with little growth projected through 2019, according to data tracker Euromonitor. Over the same period, the global market for suds should expand by 8.2 percent.Asahi and other Japan brewers have been chasing overseas acquisitions to reduce their dependence on a domestic market hampered by a shrinking population.
Buying the additional SABMiller brands will also help Asahi attract younger Japanese drinkers with established premium beers, said Haitong International securities analyst Nicolas Wang.“There was also probably a lot of competition for the assets, which pushed up the price,” said Wang in an interview. “It’s possible the company views this as a strategic investment worth paying a premium for. After all, asset quality under SABMiller is very good.”
Sechaba board of directors has resolved to change the company’s financial year end from March 31st to 31st December, the company disclosed on Wednesday.
The company, which is a parent to Kgalagadi Breweries Limited (KBL) has advised stakeholders that the current financial year will end on the 31st of December 2016. The BSE listed company will publish its current financial year results in March 2017, added a statement. The board has not disclosed reasons for the change in reporting period. On another matter, Sechaba’s parent company, SABMiller has bought Belgium-based brewer, AB InBev in a marathon bid that took months to complete. AB InBev’s reporting period runs from January to December every year.
The change in reporting period comes weeks after Sechaba reported a drop in profits for the interim results to September 2016. Profits for the first six months of its financial year declined by over 40percent as the domestic regulations continue to bear heavily on its operations.
According to the company, profits plummeted by 40, 7 percent as volumes declined by 0, 1 percent. Through its subsidiary, KBL Sechaba produces clear and opaque beers for the domestic market. Directors made it clear that industry regulations have hit them hard and the company is trying all available avenues to spring back to life. “The decline in the financial performance of the company is mainly attributable to the current regulatory environment in which the company operates,” said the BSE-listed outfit.
The regulations in question are the Alcohol Levy which is currently at 55 percent.
The Levy affects clear beer sales. There are also the traditional beer regulations which have negatively impacted opaque beer which is popular among the low-income earners in townships and villages. For the period under review, clear beer volumes managed to grow marginally by 6 percent, suggesting consumers spent more time in bars and bottle stores between April and September this year. Meanwhile, fruit beverages, sparkling soft drinks and traditional beer volumes declined in the period under review.
Despite the massive fall in profits, the company shareholders will smile all the way to the bank. The board chaired by Thabo Matthews has declared a dividend of 30 thebe per share.
There is not much happening to improve development football in Botswana, as most of the money and resources seem to focus on elite structures in the sport.
Recently Kgalagadi Breweries Limited decided to divert from top-flight football and focus on grassroots instead. This was a most welcome move in local football circles. With the demise of the popular Chappies League in recent years, not much has been happening in local grassroots football.
Moreover, the knock on effect has been devastating for both the Botswana Premier League and the national team with goals failing to bang in. However, all is not lost as there are passionate individuals who have taken an initiative to cultivate future football stars.
One such individual is fanatic Naeem Bhamjee. For five years Bhamjee, a former footballer himself, has been building up a development team known as Park Lane FC. Today the community development team which includes under 13, under 17 and under 19s has become a formidable force. “For two years now the under 19s team has gone undefeated in local development football circles,” said Bhamjee, adding that the team also dabbles in 5-a-side football.
Bhamjee, who held on to his passion for football after hanging up his boots back in 2001, said his two sons aged between 13 and 16 years are players at Park Lane. “I wanted to introduce them to football outside private school. Park Lane recruits young players from less privileged areas like Old Naledi and White City. We try to enrich and transform these players’ lives by ensuring they train and play regularly.” In addition, Bhamjee, who first played football at Nyangabgwe FC alongside the likes of Phazha Butale and Ace Chandi, said his development programme feeds, clothes and provides transport money for both their players and those from the opposition sides they engage. All this spending, he said, comes from his own pocket while some local corporate entities also provide additional support.
“Currently we have two players - Tshepo Manglas (Under 17) and Shima Manglas (Under 19 who have been called to the Zebras development camps,” he revealed. Park Lane, he added, plays alongside 50 other development teams in the Greater Gaborone Development League (GGDL), which is part of the government-sponsored Bona Naledi community development project. Park Lane will be playing at the GGDL finals scheduled for Old Naledi this weekend. The football development fanatic is contemplating forming a senior league club given the stellar performance of his Under 19 players.
“Big teams have since approached us showing interest in some of our players. However, I can allow my players to join bigger teams provided they will be looked after,” he said. Speaking to BG Sport this week, the Project Bona Naledi GGDL football coordinator Masego Nchingani confirmed that Park Lane was part of their project. Nchingani said the project, which started in Gaborone, now encompasses other areas including Kumakwane, Lobatse and Thamaga. Football is just part of the ‘Bona Naledi’ Project that started in June last year. The project involves over 4000 children in Under 13 and Under 17 teams. “This weekend will be the GGDL finals and we expect government and football officials to grace the event.”
Sechaba Brewery Holdings Limited and Botswana Development Corporation (BDC), two major interested local parties in the proposed takeover of SABMiller by AB InBev, this week refused to make their opinions (on the deal) known.
The transaction, if it gets the nod, will have sweeping implications on all investments of SABMiller the world over. Naturally, BDC an investor at Sechaba, a group part-owned by SABMiller, will be affected in one way or another should the deal go through as it has implications on BDC continued investments at the leading beer maker. Sechaba, a local unit of SABMiller, has also chosen to remain tight-lipped on the deal which may come with restructuring, de-listing, divestment and possible job losses. According to data sourced from Sechaba’s latest annual report, BDC owns 25, 59 percent of Sechaba.
The latter owns 60 percent of the operating company Kgalagadi Breweries Limited (KBL). SABMiller Botswana BV owns 40 percent of KBL while SABMiller Africa owns 16,84 percent of Sechaba. The rest of the shareholders of Sechaba shareholders own 57,5 percent of the group. Motor Vehicle Fund (MVA) and some local institutional investors have stakes at Sechaba which has seen its profit margins taking a nosedive on the backdrop of the alcohol levy and traditional beer regulations. Alcohol levy, which is currently sitting at 55 percent, was introduced to curb alcohol abuse in the country, but it has since hurt Sechaba profits. On the other side, traditional beer regulations have restricted the selling of Sechaba’s opaque beer.
SABMiller has a management contract of KBL. Under the SABMiller and AB InBev deal, which is the biggest in the brewing industry to date, the latter has put over $100 billion before the former as purchase price. SABMiller has agreed to the purchase price, but no formal documents have been concluded and signed.
The deal is subject to several regulatory approvals in jurisdictions where the two beer groups have operations. If it gets the nod, it will mean all assets of SABMiller, including its shareholding in Botswana beer making group, Sechaba, will fall under AB InBev. An investment arm of government, BDC has refused to comment on the latest multi-billion Pula deal. “We as a shareholder are not in any position to comment on this takeover you are referring to as it is yet a subject of discussions by Shareholders. Thus far, any discussions would have been at the SABMiller PLC level,” said Head of Communications of BDC, Boitshwarelo Lebang. Sechaba, which is listed on the domestic bourse, also indicated that it is constrained to comment, referring BG Business to a statement issued by SABMiller.
“I’m afraid at the moment there is nothing more we can say beyond that which is in our statement,” the group spokesperson, Mokoro Ketsitlile said in an emailed response on Tuesday. Across the border in South Africa, the deal has already met resistance among shareholders and trade unions. Public Investment Corporation (PIC), a pension fund manager for South African government said if the deal passes it will create a dominant brand that will hurt consumers. “Quite frankly I’m not in favour of it,” Chief Executive Daniel Matjila told Bloomberg news agency recently. “We may be creating some kind of a monopoly going forward which may have a serious impact on the global economy and beer market in general.” PIC owns just over 3 percent of SABMiller.
Congress of South African Trade Unions (COSATU) said in a statement that, “We will never allow a situation where the South African offices of SABMiller are relocated away from South Africa and the local revenues are spiraled out of the country to the detriment of the entire economy.” In a related matter, both SABMiller and AB InBev SABMiller on Wednesday extended the deadline for rival Anheuser-Busch InBev to make a formal $100 billion- plus takeover offer by a week. The two companies said in a statement on Wednesday that London’s Panel on Takeovers and Mergers had granted SABMiller’s request to push back the deadline to 17:00 on Wednesday, November 4. The Takeover Panel already granted a two-week extension from an initial October 14 deadline after the two parties said they had reached a preliminary agreement on a merger.