Drink driving fines slow SABMiller sales25th February, 2014 by Lauren Eads
A crackdown on drink driving in Colombia resulting in fines of $14,000 and jail sentences as long as 18 years have dented sales of the nation’s biggest brewer, SABMiller Plc.
According to a report by businessweek.com, a series of incidents before Christmas, including one case of a motorist who killed nine people in southern Bogota, led President Juan Manuel Santos to denounce “the criminal cocktail of alcohol and gasoline.”
New legislation was signed into law by Santos on 19 December, which includes tougher fines and the enforcement of lifetime driving bans for some offenders.
However the tougher rules, which SABMiller supports, led to lower-than-expected drink sales in December and January, according to Grant Harries, president of Bavaria, the London-based company’s Colombia unit.
In an interview with businessweek.com last week, Harries said: “In December, this latest enforcement — and the level of penalties applied to drinking and driving — has placed the alcohol industry under a lot of pressure.”
“What we do see is that its impact seems to be reducing, but initially everybody just really stopped their usual consumption patterns.”
December is the biggest month for Colombian beer drinking, as workers go out to spend an end-of-year bonus that employers must pay them by law.
SABMiller is the biggest beneficiary of those sales and accounting for 98 percent of the nation’s beer purchases with Colombia its biggest single source of profit.
“It’s a peak month,” Harries said. “It starts straight after they get their payout, and then it really takes off. But it didn’t take off, and this was the impact that we were feeling.”
Harries said February sales were “looking better, but that it was “unclear” if the effect of the new measures would wear off over time.
Sales of Bavaria, SABMiller’s flagship Colombian brew, are expected to grow by 1% to 1.5% in volume in the year through March 2014, Harries said, representing a slowdown from 3.2% the previous fiscal year.
The brewer is hoping sales will be boosted by the upcoming 2014 World Cup at which SABMiller’s Aguila beer is the national team’s sponsor.
Globally SABMiller is the world’s second-biggest brewer, after Anheuser-Busch InBev.