Nile Breweries Limited (NBL) wants government to stop increasing taxes on beer and instead focus more on the bigger challenge of tackling illicit alcohol, which denies government revenue.
Greg Metcalf, the outgoing NBL managing director, made this argument as his parting shot during a recent press conference to announce his retirement at the company’s headquarters in Luzira,
“When government talks about increasing taxes on beer, we don’t understand why they have to,” he said. He argued that there is more illicit alcohol in the market compared to the beer being brewed by well-established companies.
“We urge government to make sure that beer is sold and drank responsibly but also address the issues of illicit alcohol.”
According to a recent report by Nile Breweries Limited, government loses about Shs 600bn every year as a result of failing to cracking down on illicit alcohol. Over the last three years, government has steadily been increasing taxes on beer.
According to official government data, government intends to collect Shs 229.6 billion from beer alone in the current financial year of 2016/2017, with the figure expected to go up to Shs 251 bn in the next financial year of 2017/2018.
In its defence, government has always argued that the increase in the taxes is to control the consumption of alcohol. However, according to the per capita consumption of beer, Uganda is below the African average, Metcalf said.
Uganda has a per capita consumption of beer of eight litres annually while Africa, as a whole ,stands at 10 litres. Metcalf said the company is trying to produce brands for the low end market. Already, the company is brewing new brands of alcohol made from cheaper raw materials such as sorghum are being brewed. One of these is Eagle lager.
“It is the biggest brand we sell and it also provides income to about 20,000 sorghum farmers countrywide,” Metcalf said.
Other local brews such as Chibuku have been introduced, mainly for the rural markets, at cheaper prices. AB InBev acquired SABMiller, the parent company of Nile Breweries, which has resulted in a new structure. As a result, some staff have been let go.
“There have been a few jobs lost and at the same time new jobs have been created. Other maturing employers have also been given an opportunity to take up senior positions in the company,” Metcalf said.
Daniel Ogong, the former marketing director, and Julius Bonyi, a former district manager western Uganda, are the other employees who have followed Metcalf in leaving the company.
As he leaves, Metcalf takes pride in the fact that under his tenure, the company has grown. He said the company’s market share has grown to 59 per cent, from 55 per cent, over the last three years.
James Bowmaker, the new country director, says he intends to build on these achievements.
“We want to grow. We want to be super-efficient by cutting costs, using less water and keeping the quality of the beer high,” Bowmaker said.
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