E-Malt.com News article: Malaysia: Guinness brewery expects the consumption of lager and stout to decrease in Malaysia

Guinness Anchor Bhd brewery (GAB) forecasts that the consumption of lager beer and stout in Malaysia will fall by 10 per cent this year as higher taxes made the products more expensive. The Consumption of lager beer and stout — collectively known as malt liquor — had already dropped by 6 per cent in the previous fiscal year ended June 30 2005, Businnes times reported on November 9, following the highest ever excise duty increase of 27 per cent imposed by the Government on the industry in Budget 2005.

The decrease was significant considering that the industry has been trying to maintain a flat to 2 per cent growth in recent years.Budget 2006 offered no respite for the industry, with the Government introducing a new tax structure, resulting in a further increase of 9 per cent in duties for beer and stout.

“We have yet to realise the full impact of last year’s duty increase and we expect the malt liquor market to continue its downward trend. We expect volume this year to go down by 10 per cent ... it’s a lot and clearly we need to prepare for that,” said chairman, Tan Sri Saw Huat Lye, after its annual general meeting yesterday.

He stated earnings this fiscal year could be lower than the RM107.9 million it made last year because of the drop in volume, but GAB aims to manage costs better and innovate and update its products to see it through another challenging year.

“We’ve proved before that even if volume is low, we can still maintain earnings,” remarked managing director, Theo de Rond.GAB’s strategy to grow bottom lines, he said, would be to re-invent and update its strong, diverse portfolio of brands to ensure that the products are always relevant to the consumer and the highly-competitive environment.

GAB’s brands include Guinness, Tiger Beer, Heineken, Anchor, Kilkenny, Anglia Shandy and Malta.He said GAB typically spends about 30 per cent of revenue on branding and marketing activities, but this year, the allocation would be a little higher.

GAB would also be spending a “very modest” sum to roll out a new corporate logo that reflects the company’s new visual and corporate identity. Its headquarters, the Sungai Way Brewery, is also being given a facelift.

Meanwhile, de Rond said GAB and rival Carlsbery Brewery Malaysia Bhd were still in discussion with the Government about the latter’s plan to have the two use security ink on domestically produced beer packaging to curb the problem of non-duty paid products.

The Government loses revenue every time duty is not paid. About half, or 48.6 per cent, of GAB’s revenue of RM952.11 million last year went to the Government in the form of excise and Customs duties.

“We feel that we (already) have a very good marking system in place that makes it very easy for everybody to identity that the product is meant to be sold in Malaysia and duty-paid, or sold in duty-free areas.

“So in that sense, we don’t feel that there is a need to introduce secutity ink. That’s why we’re still talking to the Government about this, and that’s why there has been no implementation yet,” de Rond stated.


11 November, 2005