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Myanmar. Draught law causes beer station panic

On Kyar Kwet Thit Street in Yangon’s Tarmwe township, famous because it is home to more than 50 beer stations, dozens of young and middle-aged men and a handful of girls in their 20s enjoyed the nightlife earlier this week.

8-beer-stations 

At around 9pm customers were relaxed as they held mugs of draught beer, while the sound of calls for new orders could be heard clearly along the street.

But inside Maw Shwe Li pub, manager U Tin Shwe was panicked and confused.

Earlier that day he had received a letter from the ward administration office warning him to stop selling beer on tap. Ward administration offices are under control of the General Administration Department, which is overseen by the military through the Ministry of Home Affairs.

Bar owners holding a FL17 licence can no longer serve pump beer, the letter said, and those found breaking the rules will be punished according to the law.

“Last week, the township administrator held a meeting with beer stations and told them that FL17 license holders can no longer sell pump beer, then today I received this letter,” he said, holding it out. “I don’t know what to do. If they want to reduce the number of beer drinkers, they can raise taxes.”

Most beer stations across the country have served draught beer for many years under an FL17 licence, though officially this is prohibited by law.

U Tin Shwe said that FL17 holders have always been allowed to sell all types of beer including foreign liquor, adding that most beer stations pay K2.4 million each year in licensing fees.

Of the approximately 7000 bars and restaurants that sell tap beer today, only around 2500 hold a FL9 or FL10 licence specifically allowing them to sell draught beer, while the other 4500 operate under a FL17 license.

Pump beer is typically 20 to 30 percent more profitable than packaged beer and, when available, is almost always the preferred choice for consumers, as it is better value and perceived as fresher than packaged beer.

U Hla Win Tin, director of the General Administration Department, said yesterday that the home affairs ministry will not issue any new liquor licences for now, a decision that will come as a major blow to beer station owners forced to stop serving.

A directive from the ministry restricting draught beer sales to establishments holding an FL9 (Foreign Alcoholic Liquor) or FL10 licence was given in the first week of December last year, he said, and has only recently been enforced in regions such as Yangon.

Those hoping to get hold of an FL9 or FL10 licence, or even an FL17 licence, need to wait until someone else goes out of business.

The new direction taken by the Ministry of Home Affairs on draught beer has provoked panic among beer station owners across the country. Local sources who asked to remain anonymous told The Myanmar Times that in Magwe Region more than 50 pubs have been closed for selling draught beer with a FL17 licence, though these reports could not be independently confirmed.

Anthony Clark, managing director of Myanmar Carlsberg Company said he is not sure who will benefit from the change in policy.

“It is unclear what the benefit is to the government or consumers, to have ‘pump-beer’ outlets licensed separately from ‘non-pump beer’ outlets. However this has a material impact on bars and restaurants, many of which rely heavily upon the income they make on pump beer,” he said yesterday.

Under the old system it was understood, and common practice, that bars and restaurants with FL17 licences would be entitled to sell beer in any form.

“This is potentially disastrous for bars and restaurants that hold FL17 licences as not only will they lose profit on any beer they sell, but they will also lose consumers, who will [migrate to] outlets that are allowed to sell draught. It is also bad news for consumers as they won’t necessarily be able to enjoy pump beer in their preferred restaurant,” Mr Clark said.

U Hla Win Tin said the Ministry of Home Affairs issued new guidelines on liquor licences and transport passes for distribution, in 2015.

“Pump beer is a separate item [to canned beer],” he said. “It is not a big policy change. The new directive was given in 2015 and we passed this message on to township administrators across the whole country, to let the stations know. I think some stations have already been informed.”

He added, “People face difficulties when policies change, it is quite normal. As our liquor policy clearly states, the number of licences must be reduced each year. In the past pump beer stations were operating without a licence – we are now trying to do things more systematically.”

Military conglomerate Myanmar Economic Holdings Limited, known locally as U Paing, owns a 45 percent stake in Myanmar Brewery, which held a tight grip on the beer market for many years until it was opened to foreign giants Heineken and Carlsberg. It now holds around an 80pc share in the beer market, largely through selling Myanmar Beer, the nation’s most popular brew.

Tetsuhiko Sato, deputy managing director of Myanmar Brewery, said beer station owners will need to comply with the rules. “We just have to obey and we are trying to obey,” he said.

Lester Tan, managing director of APB Alliance Brewery Company, which produces and distributes Heineken in Myanmar, said beer stations holding FL17 licences are now likely to apply for FL9 or FL10 licences, despite the fact that no more new licences will be released in the future.

“As a result of stronger enforcement of all laws, there is some hesitation within businesses, as owners will not sell beer without the proper licences. Many business owners are now applying for the correct licences,” he said. “We anticipate that this is a short-term issue ... For the moment, we are working with our beer station business partners to see how we can help to overcome the issue together.”

U Tin Shwe said in May when he bought a new FL17 licence, nobody mentioned that it would not cover the sale of draught beer.

“Our customers mostly buy draught. If authorities force us not to sell it, we cannot afford to continue,” he said.

The manager of Y2T beer pub in Kyauktada township said she has not yet received a letter telling her to stop selling beer on tap, and is waiting for clear instruction.

“We have heard the news that FL17 holders will not be allowed to sell pump beer. We hold this licence and so do most of the pubs around the township, but nobody has yet come and told us not to sell it,” she said.

Like U Tin Shwe, the manager of Kandawlay pub in Mingalar Taung Nyunt township also received a letter on July 11.

“We are a FL17 holder and received the letter today. But we cannot stop selling draught beer right now. We do not know what to do.”

13 Jul. 2016

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