E-Malt.com News article: Indonesia: New regulation to prohibit sale of beer at convenience stores and small shops as from this month

Alcohol can be a hard sell in Indonesia, which has more Muslims than any other country. It is about to get a whole lot tougher, Today Online reported on March 28.

A regulation supported by Islamic groups that is scheduled to come into effect in April will prohibit the sale of beer at convenience stores and other small shops in the world’s fourth-most-populous country.

The ban adds to a growing list of measures by President Joko Widodo’s administration that run counter to the pro-business messages he presented while campaigning for office last year. At stake are beer sales in South-east Asia’s largest economy, where domestic consumption makes up more than half of gross domestic product and the government is trying to spur growth, foreign investment and tourism.

“Losing this channel will mean a big decline in sales for leading beer manufacturers,” said Ms Yulia Fransisca, a senior analyst at Euromonitor International. “The government will continue to be pressurised to create more restrictions on alcoholic drinks by Islamic groups in the country.”

Beer sales climbed 11 per cent last year, Euromonitor research showed. Beer producers in the country include PT Multi Bintang Indonesia and Diageo, which brews and distributes Guinness through a third-party arrangement with Multi Bintang.

“Our concerns with the current announced policies is that they will impact some of the smaller retail businesses and tourism,” Diageo chief executive officer Ivan Menezes said in an interview in Singapore last week. “There is also the risk of illicit alcohol growing again, and that is in nobody’s interest.”

The regulation, a revision to an earlier Bill tightening restriction on alcohol sales, states that beer can only be sold at supermarkets and hypermarkets, where wines and spirits are currently also available. Those who violate the law risk having their trading licence revoked. Alcohol sales in restaurants and bars are unaffected.

Ms Neneng Sri Mulyati, a spokeswoman for 7-Eleven mini marts, a franchise run locally by PT Modern Internasional, said it would comply with the law at its 190 shops in and around the capital when it comes into effect in mid-April. Multi Bintang declined to comment.

The regulation was issued without consultation with producers or retailers, said Mr Charles Poluan, the executive director of Indonesia’s malt beverage producers association.

“Traditional shops are the backbone of the beer distribution channels across a vast area of Indonesia,” said Mr Poluan, who says he has been unable to meet with Trade Minister Rachmat Gobel to discuss the ban. “We can’t yet determine how badly it will affect us economically. The picture is too astounding.”

Mr Widodo governs in a coalition including the Islamic National Awakening Party, or PKB, in a country with a secular constitution.

Islamic practice and belief are less rigid than in most parts of the Middle East and South Asia, with Indonesia’s western-most Aceh province the only one that adheres to a version of Islamic Sharia law.

In recent years conservative voices have become louder, providing opportunities for populist politicians of Islamist leaning or from secular parties to boost legitimacy by pandering to them, said Mr Muhamad Ali, an Indonesian professor of Islamic studies at the University of California.

“This is creeping Sharia, slow but steady, using legal and constitutional means,” said Mr Ali. “Nationally, it was a success for the Islamists and secular politicians who are using Islam as a way of attracting votes.”


01 April, 2015