SAB CEO Richard Rivett-Carnac says the industry’s call for the National Treasury to link excise hikes to headline inflation can help the sector better plan projects and make investment decisions faster and put the brakes on illicit alcohol trade.
Rivett-Carnac said linking excise increases to inflation would make long-term investment decisions easier and increases would be more predictable.
“As an industry, we have been very clear when talking to parliament and Treasury around asking for excise increases to be linked to consumer price inflation. Unfortunately, we have not seen that being the case. There are two main reasons we have asked for this,” Rivett-Carnac said, as the company released its 2024 full-year results on Wednesday.
“The first is about certainty. Significantly higher excise increases relative to inflation makes it difficult to plan long-term investments like, for example, building a brewery or investing in significant capex; those can be 10-year projects. If the business is uncertain about the amounts of excise tax you’re going to be paying over those 10 years, it can and does give a pause when making big capital investment decisions,” he said.
“The second reason is that we are seeing an increase in the trade of illicit alcohol in SA. The last estimate is that 22% of all alcohol sold in SA is illicit and continuing increasing excise above inflation creates a bigger incentive for those dodging excise duties.”
The company’s 2024 full-year financial results showed an uptick in revenue growth in the year under review, with the group estimating that it outperformed the industry in the beer and beyond beer segments.
“We are encouraged that the beer industry returned to volume growth in the 2024 financial year after a volume decline in 2023. The momentum of our business continued, with focused investments in our megabrands increasing the brand power of our portfolio and driving estimated market share gains in both beer and beyond beer,” Rivett-Carnac said.
“Our performance was led by our above core beer brands, which grew volumes by low-teens driven by Corona and Stella Artois, while our core beer portfolio continued to grow, delivering a mid-single digit volume increase. In beyond beer, our portfolio grew volumes by high-single digits driven by Brutal Fruit, Flying Fish and Redds.”
Shares of SAB parent AB InBev soared nearly 8% on Wednesday on the JSE, where it has a secondary listing, after the release of the brewer’s results.
The world’s biggest beer maker posted better-than-expected results on Wednesday and indicated plans to raise its dividend.
AB InBev, worth nearly R2-trillion on the JSE, is up 13% over the past month.
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