SP Brewery expects drop in produce

Business

By DALE LUMA
SOUTH Pacific (SP) Brewery expects to produce “lower single digits” in its business next year, according to corporate affairs manager John Nilkare Jr.
Nilkare told The National that this was because the alcohol industry was hit hard in the 2020 National Budget with an excise rate increase of 20 per cent over 12 months.
“We will have a 10 per cent increase followed by a five per cent increase on June 1, 2020 and a further five per cent increase on Dec 1, 2020,” he said.
“We expect to finish off this year on a single digit growth in volume with the outlook for 2020 to be on the lower single digit.”
Parliament passed the 2020 Budget on Dec 6 bringing into effect the new excise tariffs.
“The increase in excise will compel us to increase our wholesale price which will further translate to higher retail prices and this will further place pressure on the affordability of our products,” Nilkare said.
“Over the past 10 years, successive increases in excise meant beer has become less affordable and when you’re in a down economy, consumers will trade down to cheaper alternatives which include homebrew.”
Nilkare said that illicit alcohol had essentially taken over a third of the alcohol market share in PNG.
“Illicit alcohol continues to plague the marketplace with little to no punitive measures undertaken by the government against violators,” he said.
“Subsequently the hole in the government coffers keeps growing.
“This will grow even further with the added 20 per cent excise increase in 2020.
“2019 proved to be another tough year for our business as we continued to see increased trading restrictions in many parts of the country.”