Cameroon: Brewing industry calls for government intervention amid escalating costs

During the March 21 inauguration ceremony for the extension of the Yaoundé factory, the CEO of Société Anonyme des Boissons du Cameroun (SABC) addressed several government members, including Commerce Minister Luc Magloire Mbarga Atangana, Business in Cameroon reported on April 15.

"The resilience we have shown for months, and the resilience demonstrated by the entire sector, is reaching its limits (…) While it's true that we are the undisputed leaders in our market and are fully committed to developing and maintaining our top position, we are not invincible," he said hinting that the current situation could impact the operations of the Castel Group subsidiary in the country.

He explained that for the past three years, the beverage industry has faced an "inflationary tsunami" on raw materials, consumables, fuel, gas, electricity, and wages, yet beverage prices have not increased in Cameroon. "This country is unique in that respect," he claimed. In just two years, SABC has seen a more than CFA33 billion increase in input costs: CFA16 billion for the 2021-2022 period and CFA17 billion for 2022-2023. With over 50% of its revenue already going to the state in the form of taxes and duties (VAT, excise duties, customs duties, corporate tax…), "the recent increase in excise duties decided in the 2024 finance law only adds to the already palpable fragility," Descazeaud said.

"We've contributed and helped the government fight the high cost of living for years. But 2024 brings a new round of increases, not to mention excise duties and other taxes that have also risen in the 2024 Finance Act. Now, I think it's time to give a helping hand to producers to ensure that they continue to invest and produce to meet demand and market needs in the years ahead,” he said, emphasizing that SABC, like other Cameroonian companies, needs a stable business environment characterized by tax policies that foster development.

To cushion these shocks, Stéphane Descazeaud advocates for a CFA100 increase in beer prices. "They need to be raised significantly for a simple reason: every time you raise the price of beer by CFA100, the state takes CFA50 in taxes and duties. Thus, to achieve a real increase of CFA50, the minimum amount we should recover after the multiple increases suffered in recent years, it would be necessary to increase the price of beer by CFA100. But these are discussions that must be held with the government," he explained.

According to the CEO of SABC, this would actually formalize the situation. "Prices have already increased in the market, but unfortunately, this does not benefit the sector or the producers, which is very unfortunate," he said. Indeed, finding a bar that sells beer at the recommended retail price is difficult. For example, for a 65 cl beer, the recommended price is CFA650, but today it is nearly impossible to buy a beer for less than CFA700, except for takeout.

This request from the leader of the brewing market in Cameroon echoes that of the Association of Alcohol Producers of Cameroon (CAPA). On December 20, this group, which includes SABC, the Cameroon Union of Breweries (UCB), Guinness Cameroon, the Cameroonian Society of Fermentations (Fermencam), and the Society for the Manufacture of Wines of Cameroon (Sofavinc), asked the government for a CFA50 increase in the prices of beers and soft drinks due to their rising tax burdens in 2024.

According to Descazeaud, this increase is all the more vital as the brewing industry is affected by other issues. "Like all other industrialists, we are fully experiencing the numerous electricity outages that have reduced our production capacities since last December and damaged much of our equipment, for which spare parts are not always available. The same is true for our local suppliers, whose disruption rate has peaked in recent months due to their production difficulties," he stated. The consequences on the market are numerous: repeated stockouts, threats to entire sectors, and logically, market selling prices are no longer respected, he listed.

This is compounded by the unfair competition from smuggled Nigerian beer, which "floods the markets at the expense of the Cameroonian sector, which pays all its taxes." A phenomenon that intensifies as taxes increase in Cameroon, industry players argue.

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