Muhamad Al Azhari, Jakarta - Multi Bintang Indonesia, Indonesia's biggest beer producer, posted a sharp decline in profit for the first quarter due to the recent Trade Ministry regulation that prohibited minimarts and small retailers from selling beer to the public.

Net income declined 42 percent to Rp 107 billion ($8.2 million) in the January-March period from the same quarter in 2014, the company said in a statement on Thursday. Revenue slipped 23 percent to Rp 569 billion.

The regulation, which has been in effect since April 16, prohibits minimarts and small retailers (or off trade retailers as defined by Multi Bintang) from selling or distributing beverages containing an alcohol content of less than 5 percent, and that includes beer.

"This off trade ban has also caused an unintended consequence of uncertainty for traditional wholesalers, which further impacted on sales volume for the quarter," said Multi Bintang, which is controlled by Dutch brewer Heineken, said in a statement on Thursday.

"These traditional wholesalers are an important distribution channel in the route-to-market for most consumer goods in Indonesia, including beer. These traditional wholesalers supply to thousands of small and medium size hotels, restaurants, and cafes in their respective areas.

"This [regulation] effectively restricts off trade beer availability to only supermarkets and hypermarkets. Therefore, severely impacting on the availability of beer for many consumers of legal drinking age (above 21 years old) Indonesia-wide," the statement said.

"Multi Bintang, along with the industry association (GIMMI), have been in dialogue with the Ministry of Trade to resolve this major gap in the distribution chain," it said, adding that the company is in a dialogue with the ministry to find more effective solutions to provide accessibility of beers to consumers of legal drinking age, while at the same time addressing concerns of underage consumption.

In the meantime, Multi Bintang - the producer of various beer brands and soft drink, such as Bintang, Heineken, and Green Sands - is putting on hold its brewery expansion investment plan of circa Rp 635 billion, pending certainty of regulation. (Globe Asia)

Source: http://thejakartaglobe.beritasatu.com/business/multi-bintangs-q1-profit-drops-42-minimart-sales-ban/