Corona kills Heineken SA production, halts R6bn expansion plans

Heineken South Africa has been forced to shut down production entirely. Picture: Hendri Pelser

Heineken’s proposed R6 billion production facility was expected to provide a massive financial boost for the region, creating 400 permanent new jobs and making many more service-related employment opportunities available.

In the wake of the coronavirus pandemic, the re-introduced ban on alcohol sales and the collapse of the restaurant and bar trade, Heineken South Africa has been forced to shut down production entirely.

This has significantly impacted the company’s ambitious growth strategy, with the beer giant withdrawing its plans to expand its geographic footprint onto the North Coast.

Heineken’s proposed R6 billion production facility was expected to provide a massive financial boost for the region, creating 400 permanent new jobs and making many more service-related employment opportunities available.

The Inyaninga site near Dube TradePort had been earmarked for its new brewery.

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The Heineken portfolio includes eight brands: Heineken, Amstel, Windhoek, Sol, Miller Genuine Draft, Strongbow Cider, Soweto Gold and Tafel.

The company said with no end date in sight for the ban on alcohol sales, executive salaries had been cut by 20% from May to December and no bonuses would be paid.

SAB seeks to trade

Earlier this month, SAB also issued a statement, lamenting the re-introduced alcohol sales ban.

It said while it supported the re-introduction of a night time curfew, “we do not believe that the suspension of alcohol and beer sales will contribute to such an end.

“Learnings from the previous ban show that prohibiting the legal sale of alcohol and beer led to the exponential growth of illicit alcohol trade with dire public health consequences. Furthermore, the ban will threaten thousands of livelihoods that depend on the beer industry’s value chain, from farmers, suppliers and entrepreneurs, to SAB’s employees – all of whom already suffered from the prior ban. Moreover, it will deprive the government from an important source of revenue, when it is needed the most” the company said.

Taverns in the doldrums

Simlarly, the National Liquor Traders Council (NLTC) this week pleaded with government to save the 34 500 taverns that are closed due to the ban on alcohol sales.

The council said that the taverns were essential to the township economy  and that it is estimated by the department of trade, industry and competition to be worth between R40 billion and R60 billion annually.

The council is also seeking a government support grant for its taverns via a once-off payment of R20 000 each, which will require further support of R690 million, it says in a statement.

NLTC convener Lucky Ntimane called on President Cyril Ramaphosa to outline when the ban on alcohol sales will be lifted and under what conditions.

“If the government acts now and lifts the ban, we can begin to recover and prevent this catastrophe,” he said.

Reporting by Pennie Fourie, Molefe Seeletsa and News24.

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