[2008-05-06]  New Liquor Law To Irk Beer Makers
Sechaba Brewery Limited is to be tested after the enforcement of new liquor regulations limiting the hours of sale as market analysts point to the potential rise of 'innovative' drinking patterns.

Brokerage firm Stockbrokers Botswana (SBB) says its current view on fundamentals of the beer industry is positive in the medium- to long-term since the regulations place restrictions on trading hours and not on the actual consumption of alcohol.

SBB analyst Pulafela Isaacs says he does not expect the new regulations to affect volumes for Botswana Breweries, the makers of the premium Chibuku brand, at this stage but he believes there will be a change in drinking patterns for KBL products.

"What we expect to see happening is that off-site drinking may replace on-site drinking," Isaac says. "People are going to start buying more from bottle stores since they will be open when bars are closed during the day.

"We also expect to see the mushrooming of shebeens when bars are closed at night. We don't expect any significant negative effect because the reduction in trading hours is being effected in winter when consumption is traditionally low."

Under the new regulations, bars would open at 2pm and close at 10pm from Mondays to Thursdays, and from noon to 11pm on Fridays and Saturdays.

Pubs will open at 3pm and close at 10pm while trading hours for bottle stores remain the same - from 10am and 7pm. Liquor restaurants will open at 2pm and close at 1Opm from Mondays to Thursdays.

On Fridays and Saturdays, they will open at noon and close at 11pm. On Sundays and public holidays, liquor restaurants will open at 3pm and close at 10pm.

Capital Securities analyst Leutlwetse Tumelo says it is difficult to say at this stage how the new regulations will impact on beer sales.

However, he points out that the initial expectation is that "sales of alcoholic beverages will fall as retail outlets operate for shorter periods"

"On the other hand, there are those who expect drinking patterns to change over time with some people drinking more during the available hours".

The regulations come at a time when Sechaba is experiencing its best performance ever with the company having hit a turnover of over a P1 billion in 2007. Sechaba is a listed vehicle for the unlisted brewer Kgalagadi Breweries Limited (KBL) and traditional beer maker Botswana Breweries Limited (BBL).

KBL produces clear beer brands, among them the famous St. Louis, while BBL is a traditional beer division. Experts say a possible decline in volumes will have a negative impact on the company's profitability.

"It is also important to note that Sechaba's strategy to manage the possible loss of revenue from the new regulations will be crucial," argues Tumelo.

Investec also shares a consensus that off-site drinking will dominate drinking patterns and boost bottle stores and wholesalers. Tumelo does not see the new regulations affecting the beer industry in the short-term.

Isaacs believes clubs might feel a bit of a 'pinch' as their peak hours of trade have been taken away."As a result, their sales volumes may drop. We believe that the bulk of KBL's market share is made up of bars and bottle stores, so we do not expect that the drop in volumes sold in bars will be significant enough to lead to a negative impact on Sechaba volumes".


Source: © MMEGI 2002 - 2008