Beer sales leaking

Commerce & Industry

Beer sales leaking

Saturday, 25 July 2009 10:13

New liquor laws are impacting negatively on sales

and could negatively affect share prices

Legislative constraints introduced in the liquor market in the Western Cape are starting to impact negatively on liquor companies, with giant beer brewer SABMiller reporting a 2% loss in sales volume despite the South African beer market having grown by 2%.

The new liquor laws introduced by both the City of Cape Town and the Western Cape provincial government may set a legislative trend for the rest of the country, while the effects of these laws may impact negatively on the share prices of liquor companies.

While the recent direct entry to the local market of Dutch beer brewer Heineken may also have something to do with it, SABMiller has nonetheless blamed its 2% decline in sales volume on "weakening consumer demand, rising unemployment, and constraints on the sale of alcoholic beverages in the Western Cape".

The latter refers to the stricter local government and provincial laws introduced in the Western Cape, which have created some disruption in the industry and have served to clamp down on illegal shebeens that focus on beer sales and are a major part of SABMiller's local market.

In addition, the new laws curb the trading hours of licensed liquor establishments in residential areas, affecting restaurants, hotels, guest houses and clubs.

The dual impact of new liquor laws and new competition are reflecting negatively in beer sales and could also negatively affect share prices. There are fears it could set a trend.

In addition, the new laws curb the trading hours of licensed liquor establishments in residential areas, affecting restaurants, hotels, guest houses and clubs.

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