Western Cape Business News

Send  Share  RSS  Twitter  13 Dec 2009

FOOD & BEVERAGES: Liquor Act Delays Bemoaned


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DAVID Nurek, the chairman of Stellenbosch-based liquor giant Distell, has called for a speedy resolution to the long delayed Western Cape Liquor Act.

Writing in Distell’s annual report, Nurek says it is a matter of concern that the Act – originally set to come into operation in 2008 – has suffered many setbacks and has come to a virtual standstill.

We hope the newly elected provincial government will give priority to achieving a speedy resolution on the matter and so give producers and purveyors the urgently needed guidance in conducting their businesses to ensure they remain within the law.”

Distell produces wines, brandies and spirits as well as a range of ciders and ready-to-drinks (RTDs). Well known brands include Fleur du Cap, Nederburg, Klipdrift, Richelieu, Savanna, Hunters, Vawter, Burchell’s, Amarula and Three Ships.

Nurek points out that a Western Cape government commissioned survey to assess the economic impact on employment and livelihoods if the unlicensed trade (ie shebeens) were closed down, indicated job losses would be widespread.

Shebeen owners will also be driven ‘underground’, making it difficult to monitor their activities and to collect VAT.

Nurek says Distell will urge government to consider the development of specified liquor trading zones – which will make for easier monitoring of transgressions and potential criminality.

He reckons that both the demand for and viability of illegal outlets would greatly diminish with the number of zones, their individual configurations and the spread of on- and off-consumption outlets reflecting the needs of the communities.

Nurek also touches on local government’s excise duties.

He warns that if excise duties are raised above the rate of inflation, it would serve as a further incentive for trading in illicit products.

While government’s ongoing policy is to maintain a total tax burden (excise duty +VAT) of 23% on wine products, 33% on beer and 43% on spirits, we were surprised that all increases this year were at the upper end of the spectrum.”

Nurek says that – given the state of the local economy – Distell expects some form of cushioning from government against deteriorating demand.

He indicates that excise duties are now the biggest driver of spirits’ shelf prices.

Nurek says the liquor industry relies on long term planning cycles that spanned from five to 20 years. “It is extremely difficult to accommodate such unexpected increases.”

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