GGBL lauds raw material tax concession policy

The Corporate Relations Director for Africa Regional Markets for Diageo Ltd. -- the parent company of Guinness Ghana Brewery Ltd (GGBL)-- Damon Ansell, has gratified the Local Raw Material (LRM) tax policy introduced by the government in May 2013, as a good policy that has immensely helped the beverage industry since its inception.

According to Mr. Ansell, GGBL has invested over GH¢200million into the economy over the past 5 years, and plans to double that amount in the next two years due to the benefits it is recouping from the Local Raw Material (LRM) tax concession policy.

“If you look at our growth even in last year, we have realised significant growth -- and that means a lot of revenue to the government. We are agitated to do that again; we want to double the size of this business in the next two years,” he said.

Since 2014, GGBL has significantly increased its usage of local raw materials: specifically sorghum, maize and cassava for the production of its premium brands after the government of Ghana passed the Customs and Excise Act 855 -- an excise duty concession on a sliding scale for breweries using local raw materials for the manufacture of excisable goods.

In an interview with the B&FT, Mr. Ansell said that the company now acquires about half of its raw materials locally since the policy was introduced as compared to the previous 10 percent.

“The government has been very instrumental in working with the industry to create commonsense policies... If you look at our business, we were using over 10 percent cereals to produce our brands. That meant we were importing about 90 percent of our raw materials, which left us in an uncomfortable situation because we know Ghanaians could provide us with the raw materials we need if given the chance.

“Today, about 48 percent of our local inputs are provided locally by farmers, and we have the goal of expanding it to 70 percent. This has happened because the Ministries of Finance and Trade have allowed for a concession which incentivised producing locally.

So the Local Raw Material tax concession put in place by government to enable domestic sourcing of raw materials worked, and it must be sustained,” he said.

The company now works with more than 7,000 Ghanaian farmers in the north of the country to source sorghum and maize, and a further 3,000 farmers and a couple of large industrial farming companies to provide the cassava which underpins the formulation of its successful Ruut Extra Premium Beer.

In Ghana, it distributes a wide range of internationally celebrated brands including Johnnie Walker, Smirnoff and Baileys; and on the beer and stout front produces Guinness, Malta Guinness, Star and Alvaro, as well as Ruut Extra Premium Beer -- which is the first cassava-based beer on the market.