The Tribune

Commonwealth Brewery has warned that the 2013-2014 Budget’s tax and fee increases will have “a significant impact” on the company, increasing its annual costs by around $2.5 million.

Addressing the BISX-listed company’s recent annual general meeting (AGM), Nico Pinotsis, its managing director, said it would be hit with a ‘triple whammy’ - an increase in Business Licence fees, coupled with a rise in Excise taxes on Spirits and import-related Stamp Duties.

Commonwealth Brewery, as a company generating more than $100 million in per annum sales, will see its Business Licence fee rate increase from 0.75 per cent to 1.75 per cent.

“The Budget, as announced last week by the government of the Bahamas, is likely to have a significant impact in our business,” said managing director Nico Pinotsis.

“Next to an increase of Excise duties on spirits, we are confronted with an increase in Business License as well as Customs’ Stamp Tax.”

He added: “The impact of this on our sales volume will still need to be determined, as it will make our company even more sensitive to parallel trade and make the playing field even more uneven.”

That was a reference to illegal liquor and beverage imports, which some estimates suggest have a market share as high as 15 per cent.

Mr Pinotsis said the company was in the “process of liaising with government, to see what measures can be taken to mitigate this as much as possible”.

Meanwhile, Commonwealth Brewery executives credited increased beer sales, broader retail appeal through store upgrades and greater operating efficiencies with driving net earnings up year-over-year by $5 millionin 2012.

The AGM was the second held by Commonwealth Brewery, which is 75 per cent majority-controlled by global brewing giant, Heineken. The remainder is held by 3,000 Bahamian shareholders.

Julian Francis, Commonwealth Brewery’s chairman, said: “The business of Commonwealth Brewery incorporates a 150,000 square foot brewery at Clifton Pier, the wholesale distribution of beer, wine and spirits, and the network of the largest liquor chain in the Bahamas, comprised of 54 stores from the northernmost island to near the southernmost point.”

He cited the variety of brands produced by the brewery - the portfolio of Kalik brands, Kalik, Light, Gold and Lime; Heineken and Guinness beers; Vitamalt; a full range of Ron Ricardo rums; and Ole Nassau. Commonwealth Brewery also represents 70-plus labels of spirits and wines sold in its stores.

Sales volumes totalled 194,000 hectolitres or some 656 million fluid ounces of spirits, beer and wine during 2012. Revenue stood at $118 million, up more than $5 million from 2011, earning per share increased by $0.06 per share, from $0.58 to $0.64, and the company paid dividends of $17.4 million.

Commonwealth Brewery added that it had passed the 100 million mark in bottles it had recycled, and was now recycling well above half the beer bottles it uses.

Mr Francis said: “We know that there is still a lot of work to be done before the economy rebounds and we can use the other ‘r’ word - robust, instead of recessionary - but we believe we are beginning to turn the corner, and because of our hard-working, dedicated team, our directors and the support we receive from Heineken that guarantees we will always be held to the highest world standards, we have reason to celebrate.”

Mr Pinotsis added: “At Commonwealth Brewery, we believe it is important to create a balance between people, profit and planet. It is key that long-term growth should come in a responsible way

“For us, paramount in our operations is our reduction of energy, water and waste, while optimising production efficiencies. Environmental sustainability is a huge platform, and we are proud that we were able to increase our recycling rate at the company’s recycling plant by 12 per cent this year while decreasing non-recycled industrial waste and CO emissions.”