Gin producers could lose billions as RSB insists on plastic bottles ban deadline

In 2012, the Rwanda Standards Board (RSB) advised manufacturers of spirits and gin to install automated plastic bottling equipment to improve standards and hygiene in their production processes. The standards watchdog gave them an eight-month grace period to switch from plastic to glass bottle liquor packaging. The RSB says glass bottles are healthier and safer packaging material. When the grace period ended in December 2014, RSB extended it by more eight months and therefore, using plastic bottling materials is expected to cease in a month’s time on August 1. However, the over 13 companies affected and importers are not happy with the move, saying they were ill-advised by the standards body to acquire costly automated plastic bottling equipment and should be given ample time to switch. The gin manufacturers and importers say though they fully support the switch from plastic packaging to glasses, RSB should give them a grace period of two years to give the brewers time to recoup money invested in automated plastic equipment and also pay loans acquired from financial institutions. “The Rwanda Standards Board asked us to buy automatic filling and packaging machines to ensure standards. Many of us were forced to take loans from banks to buy the equipment…we are still repaying the loans. So can we afford to buy glass bottling equipment when we are still struggling with loan repayments? “Banks cannot also accept to fund you when you still have a big loan to service,” says one of the gin manufacturers. Emmanuel Rutayisire, the managing director of Kasese Distillers that produces African gin, says the company invested over $150,000 (about Rwf110.3 million) in automated equipment on the advice of RSB. He says the brewer is still repaying the loan to date. “We understand RSB’s efforts aimed at protecting consumers. However, you need to consider both sides… give us two years of grace period to repay the first loans and then get more funding from banks to buy the new equipment for glass bottling,” Rutayisire says. He adds that the impending ban on plastic bottles was not clearly communicated and explained by RSB, noting that the standards body should never have asked them to buy automated machines for plastic bottling. A cross-section of manufacturers and importers of spirits who attended the consultative meeting last week. Most of them say they are not ready to switch to glass bottle packaging and want to be given a two-year extension. (Jean Nepo Ndikumana) Rutayisire says the minimum cost of equipment for glass bottle packaging costs $250,000 (about Rwf185 million). Augustin Ngamije, the managing director of Esperanza Limited, wonders how RBS could have asked gin producers to buy expensive equipment just over a year ago only to turn around and tell them to discard it and buy yet more equipment for glass bottling. “We have invested about Rwf1 billion since last year buying the automated machines and other equipment to improve the production process. “We have not even repaid a half of this money. That’s why it is only fair for government to give us at least two years in which we will repay the loans we are servicing and try to secure more funding from banks,” Ngamije says. Esperanza produces Whisky, Vodka, Coffee Rum, Golden Sherry and SperanzaWaragi, among others. PSF speaks out The Private Sector Federation (PSF) has thrown its weight behind the small and medium brewers’, arguing that the ban could have catastrophic consequences on the economy and hundreds of families if it is implemented come August 1. Antoine Manzi, the PSF director for advocacy, also says the ban on plastic containers in the gin manufacturing sector could cripple the industry. “The spirits makers and related businesses are in the initial phase, which means that many of the investors are struggling to stay afloat and the majority are servicing loans.” “Besides, when RSB advised them to buy automated machines in 2012, they failed to specify the standards of the equipment. “We bought the costly machines on the advice of RSB, so it is fair practice that the standards body exercises restraint and flexibility and give gin producers more time to transition to glass bottles and repay loans they acquired to buy the automatic equipment for plastic bottle packing,” Manzi says. The gin makers, PSF and RSB last week held a meeting to review the progress of the switch to liquor packing in glass bottles. *********************** Standards body explains why August 1 deadline must be respected Dr Mark Cyubahiro Bagabe, the RBS chief displays both the plastic bottled gin in the right hand, and that packaged in a glass bottle at the meeting. Some of the spirits and gins packaged in plastic bottles (on the table foreground). (Jean Nepo Ndikumana) Speaking at the meeting between gin manufacturers, PSF and the standards watchdog, Dr Mark Cyubahiro Bagabe, the RBS director general, explained that the standards body banned plastic bottling because of the health risk it exposes to consumers. The ban was announced in March last year. Bagabe added that gin packaged in plastic bottles has big chances of becoming poisonous due to the presence of alcohol. He said chemicals in the plastic can leach into bottled spirit, especially when exposed to heat as a result of alcohol reactions with the plastic chemicals. “The Rwanda Standards Board announced the ban on plastic packaging in March, 2014 but in October prior to the December deadline, the brewers requested for an extension period of eight months. So now we want them to comply with the rules and not continue to expose our people to health dangers for the benefit of the few,” he said. Bagabe argued they urged them to buy the automated filling and packaging for safety reasons, and dismissed claims that the standards body sanctioned the equipment. “If we were against practices that may cause poisoning among consumers, how could we allow such machines? If some of them didn’t understand the specifications given they should have come for clarification… for us the message was clear,” he noted. He pointed out those who have already complied with the new arrangement are asking for protection against unfair competition posed by their counterparts still using plastic bottles. “These people are selling the gins at low prices at the disadvantage of those who complied with the directive. So, the deadline still holds. We are ready to work with firms that have embraced the policy. Whoever will not have complied by August 1 should not blame anyone when they are asked to closed,” said Bagabe. Though RSB officials said some of the brewers had complied to the policy, they did not indicate the number. business@newtimes.co.rw

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Gin producers could lose billions as RSB insists on plastic bottles ban deadline