THE ongoing recession is affecting local rum sales, the country's largest legal rum manufacturer said in its results released yesterday on the Trinidad and Tobago Stock Exchange (TTSE).
“For the year ended December 31, 2016, the (Angostura) Group recorded revenue of $620.5 million versus $649.4 million in 2015, a decrease of $28.9 million (or 4.5 per cent). Of this decrease, $25.0 million related to the commodity rum trade while $3.9 million related to the sale of branded products. Domestic rum sales were affected by the local economic climate, while export rum and bitters experienced growth. The group is reviewing all business lines to support future growth and innovation objectives,” said Angostura chairman Rolph Balgobin.
“Profit after tax of $122 million was $41.7 million below the prior year, and resulting earnings per share (EPS) was $0.59 versus $0.80 in 2015. The directors have approved a final dividend In respect of the year ended December 31, 2016 of $0.18 per share with a record date of April 7, 2017 and payment date of April 21, 2017. Together with the interim dividend of $0.12 per share paid on September 5, 2016, the total dividend in respect of 2016 will be $0.30,” he said.
The fall in domestic rum sales that Angostura reported is inconsistent with the premise that demand for alcohol is inelastic. Government raised duties on alcoholic beverages by 20 per cent and on cigarettes by 15 per cent, effective October 19, last year. “Alcohol and tobacco taxes are often referred to as inelastic taxes,” said Finance Minister Colm Imbert in Parliament last month.
Imbert then proceeded to give some preliminary figures on the performance of alcohol and tobacco taxes.
He explained that total excise duties collected on beer had risen from $47 million in the fourth quarter (Q4) of 2015 to $54 million in Q4 2016. “So it does appear that the tax on beer is inelastic,” he said. Similarly, excise duty collected on cigarettes in the two comparable periods (Q4 2015 vs Q4 2016) increased from $50.8 million to $58 million.
He said: “The one that did not increase—and it is too early to tell the real reason for this—is rum and spirits. The excise duties collected on rum and spirits over the period October to December 2015 was $57 million, and over the period October to December 2016 was $36 million.”