Just a week after the Minister of Health, Dorcas Makgatho, told parliament that she was not aware of any impending retrenchment at Kgalagadi Breweries, the company today closed down production activities at their opaque brewery operations in Lobatse.
Although Makgatho’s announcement of the P760, 688, 990.00 taxation collected from KBL since 2008 painted a noble picture on the alcohol levy, the company has pointed to the levy as well as traditional beer regulations and increased licensing restrictions as the reasons for their business decline.
Today KBL released a statement announcing the closure and noted that in recent years, the business has been forced to continually look for new ways to reconfigure its business units and support structures in order remain competitive. “Following the various interventions to stem the tide, KBL has been left with little option but to close production at Lobatse Brewery; making this the second closure of their Chibuku and Mageu manufacturing plants in 2 years, following the closure of the KBL Palapye Brewery operations in 2013,” the statement read in part.
The closure of operations, KBL says, will impact on 88 employees in Lobatse and the radical measure is viewed as inevitable for the entire business to currently remain sustainable in line with shareholder expectations.
KBL further states that its Opaque Beer portfolio has suffered sustained challenges in its trading environment as a result of the Traditional Beer Regulations that were implemented in July 2012; effectively banning the sale of traditional beer in residential areas (that previously represented approximately 80% of trading channels for KBL Opaque Beer Division’s traditional heritage product, Chibuku).
“Other factors that ultimately contributed to this untenable situation relate to licencing issues as well as the unavailability of land to set up Chibuku distribution points. Over this period since 2008, close to 10, 000 small entrepreneurs earning a living out of selling Chibuku have been reduced to as little as 750 in all,” the company further states.
This sustained increase in alcohol regulation, KBL says, has also resulted in some unfortunate unintended consequences since the net effect has been that, it is increasingly the lower income consumers who have been most affected.
“Notably, with this reduction in Chibuku outlets, the traditional consumers of the product have turned to potent and often dangerous illicit brews that are produced under poor quality and questionable hygienic standards.”
KBL Managing Director, Johan de Kok said efforts will be made to try to absorb as many of the potentially impacted employees of Lobatse. “Despite our numerous attempts to reduce the overall downturn; we have had to close down our Lobatse Brewery manufacturing facilities. Sadly, this will result in the loss of employment for some of our employees and the further reduction of small business entrepreneurs.”
thevoicebw
