Alcohol-related restrictions brought in to manage the COVID-19 pandemic have had a negative impact on Papua New Guinea largest brewer, SP Brewery. Managing Director Ed Weggemans talks to Business Advantage PNG about its plans once the stringent measures are finally eased.

SP Brewery’s Ed Weggemans

Business Advantage PNG: It must have been a tricky couple of years for SP Brewery because pandemic measures have restricted sales. How have you coped?

Ed Weggemans: Some restrictions still remain in place. When the travel restrictions were lifted, people thought things were going back to normal. But, for our business, we still have what I think are difficult-to-understand measures.

For instance, despite the recent easing of pandemic measures, the bottle shops remain closed on Friday and Saturday. In addition, there still remain channels in what we call the traditional trade that are still officially closed, so the impact on our business is very much there still.

2019 was a decent year for us; sales volumes grew against 2018. In 2020, when we were hit by the pandemic measures, our sales volumes went down by about 37 per cent.

So far in 2022, we are doing better than 2021 but we are not near the normal situation.

Business Advantage PNG: What would you like to see happen?

Ed Weggemans: With the travel restrictions being lifted, I don’t see why the trading restrictions cannot be lifted.

If you analyse the liquor ban and what happens: every time the government announces a ban, the steam and the homebrew guys are rubbing their hands, going ‘thank you very much’ because that means good business for them.

People are still drinking but they are drinking cheap high alcohol volume drinks that have been poorly brewed with misrepresented alcohol volume. Not only is it dangerous; the government does not collect any excise tax on that.

Business Advantage PNG: A number of manufacturers are noting supply chain issues at the moment …

Ed Weggemans: Yes, a very good point. We have quite a few projects on hold due to this.

For instance, we’ve had a solar power project that’s been on hold for three years. It’s all paid for and the equipment is ready to go. And we have a water treatment plant that we wanted to install that’s been on hold. In Lae, we have several projects delayed because we’re not able to bring in the specialised technical staff from outside PNG to build these things. These are capital investment projects. It’s actually a loss of foreign investment into the country.

Business Advantage PNG: Looking ahead, what are your plans for 2022?

Ed Weggemans: SP Brewery is part of the HEINEKEN Group and non-alcoholic beer has been a focus for many years in many markets already, especially in Europe where those kinds of products are now fully accepted.

‘Beer can be part of a healthy lifestyle if you drink moderately. That is going to have to be our business model.’

We didn’t have non-alcoholic products here in Papua New Guinea, and we decided to launch with Heineken 0.0 because we can import that.

The idea is that we will be bringing more of these non-alcoholic products. They’re basically malt-based but they will not be fermented. In case there are liquor bans, we won’t need to close.

It’s also for our credibility. People tell me that growing means I have to sell more alcoholic beer to more people and that can be seen as not very noble. But now we can use these products to grow on top of our alcohol portfolio.

This is currently under development and we’re looking to launch those this year.

Business Advantage PNG: What you’re talking about is probably already happening in most jurisdictions already that you’ve operated globally …?

Ed Weggemans: As an alcohol-producing company, there is a big emphasis on this responsibility. I’m convinced that if we want to be still in business in 100 years, we can only do that if we promote moderation of consumption.

Beer can be part of a healthy lifestyle if you drink moderately. That is going to have to be our business model.

‘People think here that everybody’s drinking beer all the time and it’s everywhere. It is not.’

Annual per capita consumption gives an indication of the prevalence of beer in society. You have countries like Germany, Austria, Czech Republic, who are near one hundred litres per capita  Then there’s countries that are in the middle – 70 or 75 litres per capita – like the UK, the Netherlands and Australia.

At the bottom end of the spectrum, there are countries that have per capita consumption ranging from 3 to 5 litres: for example, Indonesia, Malaysia – Muslim countries – and Papua New Guinea.

People think here that everybody’s drinking beer all the time and it’s everywhere. It is not.  Beer, with 4.5 per cent to 5.2 per cent alcohol by volume is a low alcohol content product.

Often, when I read the papers, beer is blamed for many of the problems caused by alcohol when the real issue is the steam, homebrew and the very cheap high alcoholic products available in PNG today.

Lately, there has been a significant effort by several Government entities to address this problem and we are in full support of these efforts.