Stiff regulations suffocate Sechaba
Beverage big-hitters, Sechaba Brewery Holdings Limited (SBHL) says the industry is seeing a dramatic increase in red tape and regulatory enforcement.
Writing in the group’s 2021 annual report, Managing Director, Mabu Nteta noted there is a steady rise in regulations, with the new rules increasingly complex and costly.
“Moreover, the increased costs of compliance across key and relevant areas of governance such as International Financial Reporting Standards (IFRS) are anticipated,” she said, adding the group work hard to ensure legal and regulatory compliance.
The mounting regulations do not come cheap, with Sechaba board chairperson, Tabuya Tau, noting cost of compliance as a BSE listed company and one that is audited for effective governance continues to rise.
“Administration expenses were up 37 percent in comparison to the prior period in order to ensure compliance with various regulations,” revealed Tau, stressing that to attend to the demands of the time, the Board and its committees held more meetings than was initially planned.
Meanwhile, despite it being another Covid interrupted year, for SBHL, 2021 was a marked improvement on its predecessor, according to Nteta.
“This was due to the lifting of the alcohol ban and normalisation of operating hours for the alcohol industry value chain participants following Covid-19 vaccination of the population,” she explained.
The MD added that while the dynamics of the beverages industry continue to evolve, she is confident SBHL’s performance will improve through increased sales volumes and implementing cost control measures to maximise returns and maintain shareholder value.
Coming off the effects of the pandemic, the group says 2021 was centred on recovery.
However, the recovery is said to have been seriously threatened by the introduction of a sugar tax and fuel prices increase, implemented at the same time.
Despite these headwinds, Cocal Cola Beverages Botswana (CCBB), a Sechaba associate company along with Kgalagadi Breweries, reportedly reached its targets.
For KBL, there were also improvements even though the company was not able to trade for a total of 126 days of the year compared to 96 days in 2020.
The clear beer category reportedly grew by 6.1 percent, driven mainly by demand for the ever popular Black Label drink.