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New excise duty disrupts Delta

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A HIKE in excise duty lowered volumes traded by Zimbabwe Stock Exchange-listed industrial concern Delta Corporation during the third quarter ending December 31, the company has said.

A HIKE in excise duty lowered volumes traded by Zimbabwe Stock Exchange-listed industrial concern Delta Corporation during the third quarter ending December 31, the company has said.

Business Reporter

In its quarterly report for the period under review, Delta said lager beer volumes were 5% ahead of those recorded the prior year and 7% up for the nine months to December 2012.

Sparkling beverages volumes rose 8% for the quarter and 10% for the nine months, while sorghum beer volumes were down 10% for the nine months.

Revenue for the quarter October to December was up 14% and 16% year-to-date driven by improved mix and minimal price increases.

“Excise duty on lager beer was increased from 40% to 45% of manufacturer’s price effective December 2012.

“This has been disruptive on both volumes and retail pricing due to lack of small denomination coinage. The impact on the business is expected to be minimal,” the company said.

Finance minster Tendai Biti last year increased excise duty for lagers to 45% from 40%.

The rate, according to Biti, had not been reviewed since January 2004, in order to allow ample time for business to reinvest in new plant and equipment.

As a result, significant investment in bottling and ancillary plants had been injected since the adoption of the multicurrency regime in February 2009 with Delta installing state-of-the-art equipment at its alcoholic and non- alcoholic beverages plants.

This resulted in volumes of beer sales growing by nearly 270% between 2009 and 2012.

Announcing the national Budget last November, Biti also introduced measures to protect locally manufactured beers from cheap imports.

“The prevailing retail prices of imported beer indicate that the landed price of imported beer is lower than local producer prices.

“This trend suggests that either declared values are understated or the correct levels of duty are not being applied,” he said.

“I, therefore, propose to levy a specific rate of excise duty of $0,45 per litre or 45%, whichever is higher, in order to level the playing field between imported and locally produced clear beer.”