Planned spending of more than R8 billion has been put on hold by two major brewers in South Africa because of the lockdown ban on alcohol sales which the industry says has so far cost some 118 000 people their jobs and lost the fiscus between R12 billion and R15 billion taxes.
South African Breweries (SAB) announced yesterday that it had cancelled R2.5 billion in capital and infrastructure upgrades for 2020 and was reviewing another R2.5 billion for 2021, according to Fin24.
Said SAB Vice President of Finance Andrew Murray: ‘The cancellation of this planned expenditure is a direct consequence of having lost (as at 3 August 2020) 12 full trading weeks, which effectively equates to some 30% of the SAB’s annual production.’
At the weekend, Heineken announced it was putting plans for a R6 billion expansion in Durban on hold. The project would have created 400 jobs.
SAB said 120 000 people in South Africa’s alcohol industry risked losing their jobs due to the ban, and that the initial ban had cost the state about R12 billion in lost taxes.
The government argues that the ban is necessary to reduce the healthcare burden of trauma cases associated with alcohol abuse at a time when hospital beds were sorely needed for Covid-19 patients.
IOL reported that multinational brewing and beverage company Distell estimated job losses so far at 118 000, and warned that nearly 800 small- and medium-sized liquor manufacturers faced bankruptcy because of the ban.
Distell said industry figures showed the tax loss from the first six-week ban on alcohol sales came to R15.4 billion. If the ban remained in place for another nine weeks, an additional R13 billion would be lost to the fiscus.
Distell chief executive officer Richard Rushton questioned whether an outright ban on alcohol sales could be justified when the damage outweighed the benefits ‘and there are smarter ways to achieve the same objectives’.
He said: ‘The long-term damage will be immense – wine farms, restaurants, glass container manufacturers and taverners are all bleeding and many will not survive. We’re facing a structural decline in output capacity in an industry that supports almost one million livelihoods and accounted for 3% of South Africa’s gross domestic product in 2019.’
The company said the alcohol industry supported about 35 000 township small and medium enterprises and more than 180 000 unlicensed liquor outlets, with each tavern owner supporting another seven people.
For licensed tavern owners alone, that amounted to 192 000 township livelihoods impacted by the ban and 76 000 jobs already lost.
Rushton said: ‘We understand the government’s duty to ensure there are enough hospital beds to meet the expected need during the peak of the pandemic. But the economic consequences of a ban are likely to cause more suffering down the line, in terms of hunger and hardship, than it can possibly prevent now. There are alternatives to an outright ban which we’d like to discuss with the government … It doesn’t have to be one or the other.’
Distell was also concerned about the growth of the illicit liquor trade. On Sunday, criminals made off with two truckloads of alcohol from the company’s Springs plant, worth about R1m at retail prices.
Positive cases grew in South Africa yesterday by 5 377 to a cumulative total of 516 862 (with 358 037 recoveries). Deaths rose by 173 to 8 539.
The highest tally of cases is in Gauteng (181 946), followed by the Western Cape (97 076), KwaZulu-Natal (84 361), and the Eastern Cape (79 674).
In other virus-related news
- The World Health Organisation (WHO) warned that there might never be a ‘silver bullet’ for the new coronavirus, urging governments and citizens to focus on basics, such as testing, contact tracing, maintaining physical distance and wearing a mask in order to suppress the pandemic. Said WHO director-general Tedros Adhanom Ghebreyesus: ‘We all hope to have a number of effective vaccines that can help prevent people from infection. However, there’s no silver bullet at the moment – and there might never be’;
- Health authorities in Vietnam said the new strain of coronavirus responsible for the recent spike in infections was three times more contagious than its predecessor. Health minister Nguyen Thanh Long said those infected with the new strain infected between five and six other people on average. In contrast, those infected with the original strain of the virus, which first appeared in Vietnam in late January, infected on average between 1.8 and 2.2 people; and
- More than 18 million infections and 690 363 deaths have been recorded globally.