SABMiller Tanzania Unit May Halt Investment on Higher Taxes

SABMiller Plc (SAB)’s Tanzanian unit said it’s considering suspending a $23 million capital investment plan this year because a tax increase announced by the government this month may curb beer consumption.

Finance Minister William Mgimwa in his June 14 budget speech announced a 25 percent increase in excise duty on beer made from imported unmalted cereals to 525 Tanzanian shillings (33 cents) a liter (2.1 pints).

“We are reviewing capital expansion based on expected lower volumes,” TBL Managing Director Robin Goetzsche said in an e- mailed response to questions today from Dar es Salaam, the commercial capital. “The rest of our East Africa operations are unaffected at this stage.”

Tanzania Breweries estimates volume growth this year will be flat or “marginally negative” because of the tax increase, against a budgeted forecast of 8 percent, he said. It is “far too early” to determine how many jobs may be cut, he said.

SABMiller plans to invest $420 million to expand production at plants in Dar es Salaam, Mwanza, Arusha and Mbeya, the company said in a statement published in the Daily News newspaper today, without specifying the time period.

TBL brews beer including Safari Lager, Kilimanjaro Premium Lager, Ndovu Special Malt, Eagle Lager, Balimi Lager, Castle Lager and Castle Lite. Tanzania’s second-biggest brewer after TBL is Serengeti Breweries Ltd., a unit of Diageo Plc (DGE)’s East African Breweries Ltd. (EABL)

To contact the reporter on this story: David Malingha Doya in Dar es Salaam at dmalingha@bloomberg.net

To contact the editor responsible for this story: Bryson Hull at bhull5@bloomberg.net

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