SAB worried about sin tax

Johannesburg - South African Breweries (SAB) says it is conferring with Treasury and other government departments on sin tax.

With Finance Minister Pravin Gordhan’s budget due to be announced next week, the beer giant is worried about further hikes in this tax.

SAB managing director and chairperson Norman Adami said that the company wanted to ensure that it received fair treatment.

Sin taxation has a massive impact, he said. Every year it rose faster than brewers’ net price increases.

Adami said SAB had no idea what to expect in next week’s budget speech.

There were always uncertainties in business and things like sin taxes unfortunately numbered among these.

SAB is hoping that any increase will be in line with inflation, which is currently around 4%. Economists’ expect it to remain close to that level in South Africa for the next 12 months.  One might therefore be forgiven for expecting any increase in sin tax to match that level.

But, said Adami, SAB recognised that to be optimistic.

He said the strategy of focusing more on existing brands had borne fruit in the past year.

SAB had stabilised market share with its four mainstream beers – Black Label, Castle Lager, Castle Lite and Hansa Pilsener. It had also succeeded in reducing costs and optimising its supply chain.

SAB, which is part of the SABMiller Group, represents 20% of the group’s total turnover and 17% of total global beer sales by volume.

Adami said SAB remained optimistic about its prospects and it was pursuing further growth opportunities.

The company had confidence in its business model and aimed to expand the soft drink division, in particular. Given the competitive reality of the South African beer market, ABI (Amalgamated Beverage Industries) would in future play an increasingly important role.

The company is also is well known to consumers for brands such as Pilsner Urquell, Miller Genuine Draft and Grolsch.

- Sake24