The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday warned that plans to extend its Excise Stamp programme to combat alcohol smuggling could be “a lot more complicated” than the initiative underway in the tobacco industry.

Eddie Gardner, Bristol Wines & Spirits’ vice-president of sales and marketing, told Tribune Business that the liquor industry featured “thousands” of brands and product sizes, compared to just several tobacco/cigarette suppliers in the Bahamian market.

The Government’s anti-alcohol smuggling plans were unveiled by Michael Halkitis, minister of state for finance, during his Budget presentation to the House of Assembly yesterday.

“We are very concerned about illegal alcohol imports, so we are moving to require stamps to be put on certain alcohol imports,” Mr Halkitis said.

“There is a lot of smuggling going on, and we want to expand the Excise Stamp programme.”

Mr Halkitis did not respond to Tribune Business phone messages seeking comment, or a detailed list of e-mailed questions asking when the necessary legislation to facilitate expansion of the Excise Stamp programme would be brought to the House of Assembly.

Other questions involved whether a target date for the initiative’s launch had been set; which specific alcohol products would be targeted; and how much revenue - both in gross dollar terms, and as a percentage of the total - the Government was losing to alcohol smuggling.

Mr Gardner yesterday suggested the initiative was likely still in the planning stages, as the Government had yet to discuss it with Bristol Wines & Spirits or - to his knowledge - any other industry player.

“It’s important that the Government works with the business community in getting their input,” he told Tribune Business, adding that it had done just that with the Excise Stamp programme now underway to combat tobacco smuggling.

While backing the Government’s intent to “eradicate smuggling”, Mr Gardner said it would likely find an Excise Stamp programme for alcohol more complex than that for tobacco.

While there were a relatively small number of suppliers and tobacco brands imported into the Bahamian market, “when you’re talking about wines and spirits it’s a lot more complicated because there’s a lot more suppliers”.

“For British American Tobacco (BAT) we have seven or eight, 10 different SKUs (Stock keeping Units), but for spirits and wines, and with different sizes, you’re talking about thousands. It’s a lot more complicated,” Mr Gardner told Tribune Business.

He added that imported foreign beers, such as Budweiser, appeared to have been most heavily impacted by alcohol smuggling.

‘The import duty per case can go up to $18.50, so that’s a lot of money to be made in smuggling beer,” Mr Gardner said. “That’s the area where there’s been most smuggling.”

He added that although “it took a while for it to get ironed out”, the Government’s Excise Stamp programme for tobacco products was now fully functioning and Bristol Wines & Spirits was having “no problems with it”.

BISX-listed Commonwealth Brewery, which is the Bahamian distributor for Budweiser via its Burns House subsidiary, is the company that has voiced the greatest concerns over illegal alcohol smuggling in recent months.

Its managing director, Nico Pinotsis, was yesterday off-island and did not respond to Tribune Business e-mails seeking comment, but he previously told this newspaper that there had been a “significant increase” in beer and spirits smuggling in 2013.

He said then that the BISX-listed brewing and retailing conglomerate “has the impression” that parallel imports increased year-over-year, based on the “eyes and ears” of its 400 employees.

“Let’s put it this way,” he said. “We are always concerned when people bring in products and don’t pay their due duties, as that does not create a level playing field.

“Last year, we had the impression that more came in than the year before. It’s what our eyes and ears see in the market. We have 400 people in this company, and they walk around, and see and hear. That’s 800 eyes and 800 ears.

“We see the packaging of products we don’t carry for brands that we do carry, sold against prices that are cut prices. It all adds up, and people selling it cheaper than we do, we get a few ideas,” Mr Pinotsis added.

“It is a big problem for the Government, which is losing revenue if people don’t pay their duties. And, of course, it’s a problem for us as well, as it puts us in a strange light with our customers as well. It’s bad for our company’s image.”

He reiterated Commonwealth Brewery’s concerns in its 2013 annual report, writing: “It is also paramount that in this fiscal reform, the playing field needs to remain level, not in the least to avoid the Bahamas becoming a dumping ground for cheap imported products that jeopardise our competitiveness and hence survival as a local manufacturer.”