Liquor trade: Murree Brewery nervy about trade liberalisation
As govt considers exports of alcoholic beverages, local distillery demands protection.
KARACHI:
One would expect that a company whose sales are heavily taxed and severely restricted to a tiny segment of the population would welcome liberalisation of those rules. Not Murree Brewery, which seems rather comfortable with the status quo and appears to very much like things to stay the way they are.
In recent months, there have been reports that the government is considering allowing licensed breweries and distilleries in Pakistan to begin exporting their product. Unto itself, this should be welcome news for Murree Brewery, which may find a ready market in other parts of the world. But company officials were not quite as enthusiastic as one might expect.
“What is worrying for us is that the government is allowing imports of liquor,” said Isphanyar Bhandara, the company’s CEO. “We would like protection like the car industry.”
Government officials, however, deny that imports are being allowed at all. Najeeb Khawar Awan, a spokesperson for the commerce ministry, said that the policy pertained only to exports. “It has nothing to do with imports, which are banned and will remain banned.”
He added that the economic coordination committee (ECC) of the cabinet had already approved the policy in principle, but that the formalities, such as reviewing and revising the existing laws remained to be done. He did not provide a timeline for when the process would be completed. The policy would allow Pakistani companies with licenses to produce alcoholic beverages to countries that are not members of the 57-member Organisation of Islamic Conference – an international group of Muslim-majority countries.
Despite Muslim citizens of Pakistan being banned from consuming or trading in alcohol, Murree Breweries’ operations remain perfectly legal since the majority shareholders in the firm are the Zoroastrian Bhandara family. The late Minocher Bhandara was once a member of the National Assembly.
While it is widely known that the vast majority of Murree Brewery’s clientele is Muslim, the firm remains coy about its distribution. “Muslims are not allowed to drink. So we think we are enough to cater to the 3% that are allowed to drink,” said Isphanyar.
“We are not afraid of liberalisation. But the only problem with doing this is that it would attract the attention of the right wing,” he added.
Despite recent cases of harassment by the Punjab government, the company has been doing well financially. Revenues were up 29% for the year ended June 30, 2011 to Rs4.8 billion. Profits were up 65% to Rs520 million, compared to 2010.
About three-quarters of the company’s revenues are from the liquor division. Murree Brewery’s primary product is its beer, though it also sells vodka, whiskey and gin. The firm also has a division that sells non-alcoholic beverages as well as another that sells glass.
Attitudes about alcohol differ widely between provinces. While the Sindh government has been reported to have been increasing the number of licensed liquor stores in the province, the Punjab government has been reported as having harassed Murree Brewery distribution workers, ostensibly over a dispute about taxation.
“We are being put in a corner by the Punjab government,” said Isphanyar.
Nevertheless, the firm seems comfortable with its position in Sindh, which accounts for the bulk of its sales. As a result, the Murree Brewery has not been pushing the government for a relaxation of regulations. “We are not pushing too hard. My product is not being stopped from going to Sindh,” said the company’s CEO.
Muree Brewery is listed on the Karachi Stock Exchange. The company’s stock was trading at Rs64.08 in trading on the exchange on Wednesday, unchanged from the day before.
Published in The Express Tribune, December 29th, 2011.
One would expect that a company whose sales are heavily taxed and severely restricted to a tiny segment of the population would welcome liberalisation of those rules. Not Murree Brewery, which seems rather comfortable with the status quo and appears to very much like things to stay the way they are.
In recent months, there have been reports that the government is considering allowing licensed breweries and distilleries in Pakistan to begin exporting their product. Unto itself, this should be welcome news for Murree Brewery, which may find a ready market in other parts of the world. But company officials were not quite as enthusiastic as one might expect.
“What is worrying for us is that the government is allowing imports of liquor,” said Isphanyar Bhandara, the company’s CEO. “We would like protection like the car industry.”
Government officials, however, deny that imports are being allowed at all. Najeeb Khawar Awan, a spokesperson for the commerce ministry, said that the policy pertained only to exports. “It has nothing to do with imports, which are banned and will remain banned.”
He added that the economic coordination committee (ECC) of the cabinet had already approved the policy in principle, but that the formalities, such as reviewing and revising the existing laws remained to be done. He did not provide a timeline for when the process would be completed. The policy would allow Pakistani companies with licenses to produce alcoholic beverages to countries that are not members of the 57-member Organisation of Islamic Conference – an international group of Muslim-majority countries.
Despite Muslim citizens of Pakistan being banned from consuming or trading in alcohol, Murree Breweries’ operations remain perfectly legal since the majority shareholders in the firm are the Zoroastrian Bhandara family. The late Minocher Bhandara was once a member of the National Assembly.
While it is widely known that the vast majority of Murree Brewery’s clientele is Muslim, the firm remains coy about its distribution. “Muslims are not allowed to drink. So we think we are enough to cater to the 3% that are allowed to drink,” said Isphanyar.
“We are not afraid of liberalisation. But the only problem with doing this is that it would attract the attention of the right wing,” he added.
Despite recent cases of harassment by the Punjab government, the company has been doing well financially. Revenues were up 29% for the year ended June 30, 2011 to Rs4.8 billion. Profits were up 65% to Rs520 million, compared to 2010.
About three-quarters of the company’s revenues are from the liquor division. Murree Brewery’s primary product is its beer, though it also sells vodka, whiskey and gin. The firm also has a division that sells non-alcoholic beverages as well as another that sells glass.
Attitudes about alcohol differ widely between provinces. While the Sindh government has been reported to have been increasing the number of licensed liquor stores in the province, the Punjab government has been reported as having harassed Murree Brewery distribution workers, ostensibly over a dispute about taxation.
“We are being put in a corner by the Punjab government,” said Isphanyar.
Nevertheless, the firm seems comfortable with its position in Sindh, which accounts for the bulk of its sales. As a result, the Murree Brewery has not been pushing the government for a relaxation of regulations. “We are not pushing too hard. My product is not being stopped from going to Sindh,” said the company’s CEO.
Muree Brewery is listed on the Karachi Stock Exchange. The company’s stock was trading at Rs64.08 in trading on the exchange on Wednesday, unchanged from the day before.
Published in The Express Tribune, December 29th, 2011.