The Confederation of Malaysian Brewers Bhd (CMBB), concerned over consumers increasingly switching to compounded hard liquor and home brews due to high prices, has called on the government not to impose any further increase in excise duties for such beverages in Budget 2008.

This worrying trend stems from the consumer prices for beer and stout in Malaysia which have risen beyond the threshold price particularly for the low and moderate income groups, CMBB said in a statement here today.

From 1991 to last year, excise duties on beer and stout have increased by a total of 169 percent.

CMBB, representing the interests of brewers in Malaysia, said that the easy availability of these low-priced locally-blended high alcohol-content products counters the government’s campaign on healthy living.

The low-priced attributes have also contributed to the decline of the tax-paid malt liquor market, said CMBB, whose founding members are the major brewers — Guinness Anchor Bhd and Carlsberg Brewery Malaysia Bhd.

One way to stamp such growing undesirable trend is not to impose any further increases in excise duties on beer and stout which the government might consider in the 2008 Budget to be presented in Parliament in September.

Tax-paid beer and stout volumes have declined by 14 percent since 2004 and even a reprieve in excise duties hike last year, after three years (2003-2005) of continuous increases, aggregating 50 percent, did not help the market to reverse the decline.

The market has in fact declined further by 1.4 percent this year.

According to the findings of a dipstick survey conducted by an independent research company appointed by CMBB, the low price of higher strength alcohol content products has served to attract consumers to these alternatives.

CMBB Executive Director Tan Sri Ajit Singh said the survey involving consumers and store owners on consumption patterns of compounded hard liquor has proven right the brewers’ suspicions of the growing trend for compounded hard liquor.

“Consumers are buying more and at a higher frequency in view of the affordability of the compounded hard liquor.

For a minimum price of RM2.50 to RM12.50, the consumers are able to be satisfied with alcohol that ranges in strength from 38 to 40 percent rather than beer, stout or other hard liquor,” he added.

For example, the price of a glass of beer is 1.1 times more than the price of a Big Mac in Malaysia while in the US, it is only 0.4 times and Singapore, 0.7 times.

Similarly, the price of a beer vis-`-vis Coca Cola is 5.8 times in Malaysia, while it is only 1.4 times in the US and 3.8 times in Singapore.

A glass of beer is also much more expensive than the equivalent serve of wine, whisky, brandy and other spirits.

This has caused consumers to switch to higher strength alcohol content products like wines and spirits and, more worrying, the consumption of low-priced compounded hard liquor, as well as the tax free home brews.

“Statistics show that since 2004, the consumption of tax-paid beer and stout has fallen by 14 percent while the volume of wine and spirits has increased by 12 percent and three percent respectively,” he said.

Such a development runs against the grain and defies the spirit of the government’s objective of raising taxes to discourage excessive alcohol consumption.

CMBB, which supports the responsible consumption of alcohol, called on the government to view seriously this development which is an anomaly of the country’s high tax regime.

Ajit Singh cautioned that any increase in excise duties will have counter productive and negating effects for the tax-paid malt liquor market, the government and consumers.

Another round of increases will only send the market spiralling downwards and have far-reaching consequences on an industry in which 500,000 people (directly and indirectly), and 25,000 outlets depend upon for their livelihood.

“It will also have an impact on the government which derives RM1 billion in tax revenue annually,” he said.

Ajit Singh said a no-increase in excise duties will make beer and stout available at competitive prices and help improve Malaysia’s image as an attractive tourist destination in conjunction with Visit Malaysia Year.

The tourism industry will get a boost as competitive prices of beer and stout is one factor that tourists consider in making Malaysia a destination of choice, he said.