Malaysia: Guinness Anchor Brewery hopes the Government will not increase excise duty for malt liquor

Guinness Anchor Brewery hopes the Government will not increase excise duty for malt liquor for a fourth consecutive year in 2006, as this will put more pressure on the industry Business Times reported on March 17.

"We need to be left alone next year and the coming years," Guinness managing director Theo de Rond told the press after signing the company's 12th collective agreement with the Union of Beverage Industry Workers in Subang on March 16.

"Another duty increase in this year's Budget will make us and the industry suffer tremendously. I believe we've come to the limit, in the sense that even the consumer can't afford to buy beer," he said.

He said Guinness will find it difficult to repeat 2005's performance when the company posted an almost 10 per cent rise in net profit of RM108 million and turnover grew by 7.4 per cent to RM952.1 million.

Consumption of lager beer and stout - collectively known as malt liquor - has fallen by 8-9 per cent in the first six months of its financial year ending June 30 2006, following a 9 per cent duty hike imposed by the Government in Budget 2006. He said the falling trend will add more pressure on the Government's efforts to collect revenue from beer sales. In the second quarter, Guinness' revenue fell 2.9 per cent to RM254.8 million due to higher beer price as well as stout, and lower consumption.

"There are a lot of people working in this industry. Not only in our brewery, but also glass suppliers, advertising agencies, wholesalers and retailers. "I think it is vital for the Government to understand that employment in these sectors will also come under pressure if there is another duty rise," De Rond said.

The jump in sin tax this year succeeded the highest ever excise duty increase, a whopping 27 per cent imposed in Budget 2005 that followed a 10 per cent climb in the year before. Guinness expects the demand to fall and the malt liquor market volume to contract by about 10 per cent this year.

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