The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Commonwealth Brewery yesterday expressed concern that alcohol smuggling into the Bahamas had increased year-over-year, a development that threatened to 
“destabilise” the market and pricing for legitimate operators.

Nico Pinotsis, the BISX-listed firm’s managing director, told Tribune Business: “What we are seeing is a lot [of parallel imports], especially American beer, coming in.

“Customs is doing a lot, making a lot of effort to stop it, and hopefully they will continue to do so, as it will benefit government revenues and the stability of the market as well.

“Price levels always get destabilised when you have smuggling. It’s become a little bit bigger this year than last year. I’m confident the Government is trying to stop it as much as possible.”

Mr Pinotsis said it was impossible to determine the Bahamian liquor market share obtained by so-called ‘grey’ or parallel imports, although estimates of 10-15 per cent have often been talked about.

The Commonwealth Brewery chief, though, said the practice only benefited the smugglers and those they sold their product to, as they evaded both import duties and undercut legitimate operators on price.

Meanwhile, Mr Pinotsis said the 2013-2014 Budget’s Business Licence fee, spirits and other Excise Tax/fee increases would add between $1-$2 million to Commonwealth Brewery’s annual operating costs, although “some of it will only hit next year”.

As for the likely impact Value-Added Tax (VAT) will have on Commonwealth Brewery’s costs and operating model, Mr Pinotsis said it was impossible to determine until he saw the relevant legislation, regulations and Tariff Schedule.

“It is a fundamental change in the tax structure, and when you do that there’s some reason for concern, but I’m pretty sure we’ll have to work with it,” Mr Pinotsis told Tribune Business.

“We’ll have to manage it, get ready for it, and let’s see what impact it has on consumer prices at the end of the line, and if it has an impact on the way we do business in the Bahamas.”

Mr Pinotsis said Commonwealth Brewery was focused on controlling costs and driving consumers to its brands over the competition.

He added that the company’s year-over-year increases in marketing expenses had resulted partly from Kalik’s 25th anniversary, and also the country’s 40th anniversary celebrations.

And Commonwealth Brewery’s performance for the remainder of 2013 would depend heavily on how the economy and tourism performed, plus the weather.

If everything went to plan, Mr Pinotsis said there would be “no reason to be dissatisfied with 2013, and no reason to be entirely satisfied”.