Malawi Government order to cost liquor firms millions of kwacha

Liquor manufacturers have said government’s order that they start packaging their products in 100 millilitres will cost the firms millions of kwacha to adjust their machinery in line with the directive.

The Ministry of Industry and Trade recently ordered all liquor companies to increase the minimum quantity of spirituous liquor packaging for sale from the current 30ml to 100ml.

 “All spirituous liquor manufacturers will be expected to comply with this change by May 6 2013 to enable them to adjust their production machinery and to exhaust stocks of the 30 ml packaging materials,” reads in part a statement from the ministry.

The ministry, in partnership with Malawi Bureau of Standards (MBS), issued the directive to curb liquor abuse, especially among minors.

But Ask Beverages managing director Keval Thakrar said changing the sizes of liquor sachets will require overhauling some machines.

“We are automatically required to source funds to replace most of the spare parts of the machinery we use in production. Otherwise, we are going to close down. If that happens, people will lose their jobs,” said Thakrar whose company employs 120 people.

He also foresees liquor sales going down if the directive is effected.

“Sales will go down because liquor prices will go up three or four times as a result of the increase in volume of the content from 30ml to 100ml,” he said.

Currently, one 30ml sachet costs between K25 and K30.

In 2010, the ministry reported that there was an outcry from the public, especially parents, that liquor consumption has increased because of the introduction of the 30ml sachets.

After consultations, MBS banned sales of liquor in 30ml sachets, advising all liquor should be sold in bottles and that the standards body should decide the size of such containers.

Liquor forms were given six months to phase out the sachets, but Abwenzi Group which produces Rider brand of spirits, challenged the order through a court injunction which retrained MBS from enforcing the directive.

Apart from pursuing the matter in court, government has in the last two budgets raised taxes on the product. In the 2011/12 budget, government imposed a 150 percent tax on the liquor while in the 2012/13 budget; the tax was increased to 250 percent.