…as sin tax continues to scupper profits
Leemisa Thuseho
MALUTI Mountain Brewery (MMB) has raised concerns with key government stakeholders over the impact of the Alcohol and Tobacco Levy on its operations, warning of potential job losses due to declining profits.
MMB held an engagement session on Tuesday this week at its premises in Maseru with officials from the Revenue Services Lesotho (RSL) and the Ministry of Tourism, Sports, Arts and Culture, where it shared the status of the business and outlined the challenges it is currently facing.
The guests were also taken on a tour of the brewery plant to get a better understanding of its operations.
The brewery highlighted a significant drop in sales, largely attributed to the recent 2.5% increase in the levy on alcohol. MMB also expressed concern that the levy has created a major price gap between alcoholic products in Lesotho and neighbouring South Africa, which is fuelling cross-border illicit trade.
The government earlier this year introduced an additional 2.5 percent levy on alcoholic products on top of the 7.5 percent imposed in October 2023.
Speaking to the Lesotho Times, MMB Country Director, Hannes Smal, said the worsening situation could ultimately lead to job losses if not addressed.
“We called this meeting as part of our efforts to engage with stakeholders, share what we are doing, and explore how best we can collaborate to protect and grow the industry,” Mr Smal said.
“Engaging with our stakeholders, especially RSL and the Ministry of Tourism, is critical for us. One is a legislative stakeholder, while the other oversees tax policy. We believe there are synergies we can explore together to grow the local beer industry and the brewery itself.”
He stressed the importance of stakeholders seeing first-hand the impact of their decisions on the business.
“It is vital for them to see what we are protecting as a business and how we can collaborate, as government and industry, to ensure sustainability and growth,” he added.
Mr Smal emphasized the toll that the new liquor levy has taken on MMB.
“The recently implemented liquor law is negatively affecting our operations. Given the price differences with South Africa, it is very difficult for us as a small business to compete.
“What is needed now is supportive legislation, both existing and future, that protects local businesses and minimises the risk of job losses, while encouraging investment.”
For his part, RSL Commissioner of Client Services Rakokoana Makoa thanked MMB for the engagement and acknowledged the severity of the situation, especially the downward trends shown in the brewery’s performance graphs.
“We don’t want to see job losses, and I can assure you we will do everything in our power to help stabilise the situation.
“We have already started engaging with our partners in the tourism sector. Today’s engagement helped us gain a deeper understanding of the challenges MMB is facing,” Mr Makoa said.
While government may introduce levies for policy reasons, it must also ensure such decisions do not undermine local production, he added.
“We cannot introduce a levy and then later allow unrestricted imports of alcohol products. We must protect our local industry,” he said.
Meanwhile, Principal Secretary in the Ministry of Tourism, Sports, Arts and Culture, Mantiti Khabo, described the engagement and site visit as an eye-opener.
“What we saw today was a reality check. It’s not in anyone’s interest to see this company going into decline. It’s scary because it means many people could lose their jobs.
“We are already troubled by the closure of other companies, and we do not want the same to happen here, especially with the already pressing issue of youth unemployment,” Ms Khabo said.
She expressed hope that government and MMB would work together to find solutions.
“I am encouraged by today’s discussions. We should be joining hands to rescue the situation. It is in the government’s interest to support and protect what is happening here.”
