Expect more beer duty deals in Africa

By: Chris Mercer - 2 November 2011 15:29

SABMiller's cut-price duty deal to produce its new Impala beer brand from cassava in Mozambique could be a sign of things to come in Africa.

To be proper about it, SABMiller is not the first to reach such a deal with authorities. For several years, Diageo has sold Senator Keg at reduced duty in Kenya, on the proviso that the beer helps to lift more Africans out of illegal alcohol consumption.

Bootleg liquor is potentially dangerous, of course, but it also deprives the authorities of tax revenue (and companies of sales).

I would not be surprised at all to see more duty tax deals along the Senator Keg and Impala lines across Africa, particularly involving the use of local raw materials.

Governments want revenue and brewers want to make beer more affordable to lure more consumers. At the same time, using local raw materials lowers production costs and brewers can argue that the policy has the potential to generate more wealth within a given country.