Indonesia: PT Delta Djakarta brewery expresses anxiety over anticipated approval of controversial alcohol prohibition bill

Publicly listed beer manufacturer PT Delta Djakarta has expressed anxiety over the anticipated approval of a controversial alcohol prohibition bill, saying that the move would likely hamper its sales after slowly recovering from a rough 2015, Jakarta Post reported on May 18.

Last year, all 10 party factions of the House agreed to continue deliberations on the prohibition of alcohol. Legislators who support the bill have argued that Indonesia needs a stronger legal standing to control the production and consumption of alcohol.

The bill, sponsored by the United Development Party (PPP) and the Prosperous Justice Party (PKS), political organizations that are Islamist in orientation, has become one of the priority bills in this year’s National Legislation Program (Prolegnas).

The bill, reminiscent of the US’ prohibition efforts in the 1920s, would outlaw the production, distribution and sale of beverages with more than a 1 percent alcohol content.

Speaking to reporters on May 17, Delta Djakarta finance director Alan V. Fernandez said the company hoped the alcohol bill, if passed, would not include many new restrictions.

If this eventuates, the firm — local producer of various beer brands, like Anker, Carlsberg and San Miguel — will aim for a 10 percent sales increase for this year.

“Or else, we expect a similar contraction to last year,” he said.

Delta Djakarta is 58.3 percent owned by Philippines-based beer producer San Miguel, 26.25 percent by the Jakarta administration and the remaining share by the factory itself and the public.

Delta Djakarta has seen its sales up by 30.7 percent to Rp 430.6 billion (US$32.3 million) from January to March this year compared to the corresponding period last year. In the first quarter of 2015, the company’s sales plunged by 42.4 percent year-on-year due to the enactment of Trade Ministry Regulation No. 6/2015 on alcohol control that bans beer sales in minimarkets.

“The drastic pick-up is understandable because a significant drop was experienced in the same period last year, besides the fact that we earn more as we also raised the selling price in June last year,” Fernandez said.

The current alcohol bill prohibits anyone from consuming any alcoholic drinks except at traditional or religious ceremonies, or for tourism and pharmaceutical purposes in permitted places, stipulated in article 8.

The draft also obliges 20 percent of state income from beer excise taxes to fund a campaign over the danger of alcohol and the rehabilitation of alcoholics.

Indonesia has since January 2014 increased beer excise by 18.24 percent, causing falling net revenues and profits for beer producers.

Together with the rising imported malt and packaging prices, Delta Djakarta registered a 25.5 percent sales drop to Rp 1.5 trillion as of December 2015 from Rp 2.1 trillion in December 2014.

Its net profit also dropped 33.4 percent to Rp 192 billion, while its realized production capacity only reached 50 percent compared to 70 percent in 2014.

18 May, 2016