Earlier this month the parliament of Lesotho enacted the tobacco and alcoholic products levy act 2023. This act was circulated by the authority of the Minister of Finance Honourable Dr. Rets’elisitsoe Matlanyane. Through this levy the government of Lesotho intends to use this legislation as an instrument to influence acceptable or normal consumption of tobacco and alcoholic products. Further the bill is expected to increase revenue gain in order to provide for developmental programmes. 

What is the alcohol and tobacco levy in Lesotho? Vendors who sell these products must charge the levy at the rate of 30 percent for tobacco products and 15 percent for alcoholic products, collect and remit the levy to the Revenue Service Lesotho (RSL). The levy is charged on the consideration for the products exclusive of Value Added Tax.

This increase in liquor price became an extreme heart-stab to the tourism industry business owners, suppliers, and consumers. Informative Newspaper Mamafa Machere investigates the impacts of this levy on the value chain.

Business owners are worried for their businesses

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First we met owner of a bar known as Gugulethu located at Ha-Thetsane, Maseru. He had just stocked half a truckload of beer in cases. It’s been a while since prices went up and this levy has affected him most definitely. He said not only his customers are feeling the pain or shocked at the act, even them as business owners are worried for their businesses. They don’t understand how the increment would impact them as shoppers in the long run.  A few weeks back at his shop, a can of beer was M15.00, they used to stock it from their liquor distributor at M292.40 per case of 24 but now he sells a can at M18.00 in his bar while they stock it at M344.00 per case.

Liquor Distributor experience turnover challenges

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Sefalana Liquor, one of Lesotho’s biggest liquor wholesalers has also been impacted by this sudden increase in prices. Mrs. Mantoa Sebote the Admin Manager at Sefalana Liquor said most of the needed sales from clients and consumers we not incoming as usual. Business owners to be specific would cancel their orders and claim they are awaiting recommended price from the government. “They seemed to believe that the prices were just done by us (Sefalana) to make profits, however as time went on they understood that this price issue was actually done by the government for economic purposes it was not Sefalana’s fault.”

New sales and marketing strategies

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Businesses in the tobacco and liquor industry now are forced to come up with new marketing strategies to boost their sales. Sefalana Liquor recently hosted an event in celebration of 5 years in business. The event was in honor of their customers and suppliers for their continued support in the past 5 years. Most importantly the aim was to revive sales that were impacted by the introduction of the alcohol levy on the 1st of March. There were prizes won by the customers based on how much he/she spent on sales. For example, if one bought 12 bottles of Smirnoff 1818 he or she stood a chance to win a Samsung double door fridge worth M15 000. For other product sales prizes were ranged from braai stand to bar accessories.

Another strategy was the media invitation, Sefalana made a live broadcast of their 5years “birthday” celebration at their premises. This initiative was to market Sefalana liquor store, publicize the event and the specials of the day.  

Manufacturers beef up their promotions in selected stores

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The enactment of the bill on the levy was also a wakeup call to Maluti Mountain Brewery. The main distributor of Maluti and Flying Fish beer in Lesotho also rose to the occasion; they’ve beefed up their promotions in selected stores. For every 6 pack of Flying fish bought, consumers get free branded items from shoe laces, bucket hats, shirts, scarfs to waist bags.

Consumers have made peace with the situation

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Customers were also shocked by the sudden increase in alcohol prices in the first week, however, they seemed to have made peace with the situation, as they were seen in numbers enjoying liquor on Moshoeshoe’s day festivities, buying and enjoying their favorite drinks as usual.

Mrs. Nkaiseng Shale, a customer said, she was shocked by the sudden price increase on beer at one of her favorite liquor store. However, after learning about the levy, she now understands that, this situation is a country-wide issue, therefore they are still going to continue supporting their local businesses and enjoying their favorite beverages.

Some international brands and businesses not extremely affected

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However, there are some businesses or brands not extremely affected by the alcohol levy, Annabelle wine ambassador Relebohile Letele said, their product is the cheapest among their competitors, prior to the levy, most people still preferred it and they still buy in numbers. The same was said by the Belgravia ambassador.