SP loses K21mil, staff

The National Business

By DALE LUMA
THE restriction of the sale of alcohol under the national isolation strategy has caused a loss of K21.46 million in revenue, South Pacific Brewery managing director Ed Weggemans says.
Weggemans told The National that this represented a loss in volume of sales of 85 per cent in the channels that were closed that would have generated K17.08 million in excise duty and K4.38 million in goods and services tax (GST).
He said a further K1 million in utilities was lost for water and power and the company had, since January, begun a redundancy programme that would see a reduction of 20 per cent of its staff.
“The following compelling points tell the story of the impact and unintended consequences of the liquor restrictions,” Weggemans said.
“Liquor restrictions are forcing consumers to the illicit trade; alcohol consumption continues while the Government loses out on income from this licit trade.
“The loss of revenue from excise and GST from SP Brewery alone for the duration of the latest announced liquor restrictions is calculated shows that the channels that were closed accounted for 85 per cent of the projected sales volume in the past four weeks.
“The volume lost would have generated K17,080,644 in excise duty and K4,383,528 in GST.
“This loss of K21,464,172 is irreversible and will not be recovered when the outlets open again.
“A further K1 million in utilities revenue was lost (WaterPNG/PNG Power).
“To right size the organisation to the new volume levels, since January, SP Brewery has begun a redundancy programme which would see a reduction of our employees by 20 per cent.
“This will have a ripple effect on many families in the community and we also anticipate that many other manufacturers/suppliers/customers are also downsizing their organisation to cut down on costs relative to productivity.”
SP Brewery has 2,682 licensed customers throughout the country and the restriction would result in the closure of 2,228 outlets, of these 75 per cent are small-to-medium enterprises (1,671 SMEs would be affected).
Weggemans said liquor restrictions forced consumers to the illicit trade but alcohol consumption continued.
“Home brew and steam can have devastating effects on the people of PNG as the production methods are extremely unsafe and the production process produces a product with an undefined alcoholic content that affects people’s health, which is a burden for the healthcare system in Papua New Guinea,” he said.
“Illicit alcohol operators thrive during liquor restrictions as these present the ideal opportunity for uncontested sales.”
Weggemans said the brewer recommends that the government allow:

  • TAKEAWAY sales of alcohol in all major retail supermarkets;
  • TRADING to occur between Monday to Saturday (Closed on Sunday); and,
  • OUTLETS to maintain Covid-19 protocols at all times.