Liquor industry on its knees

When President Cyril Ramaphosa on July 12 declared a second ban on alcohol sales, the industry and its extended value chain plunged into a financial crisis the likes of which it had never before experienced.

Industry leaders today said they had mere weeks left to avoid an inevitable crash which would lead to massive job losses. Without prior consultation between government and stakeholders, the surprise announcement sparked a downward spiral for the industry.

CEO of South African Breweries (SAB), Ricardo Moreira said the company had just announced its worst financial quarter in its history, recording a 60% drop in volume in the South African market. It was also announced that SAB had cancelled a R5bn investment due to revenue losses suffered as a result of the ban.

Moreira said being part of a global network did not safeguard SAB against the dire situation. The company has business interests in 11 other African countries and views SA currently as an investment risk.

SAB had until now protected and safeguarded its employees, but an extension of the ban would, he said, most definitely force the company to downsize its workforce of 6000.  In a knock-on effect, this meant that at least one million jobs in the extended value chain linked to the industry,s were also at risk.

During a virtual press conference, representatives from glass manufacturer, Consol Glass, the Liquor Traders’ Association and Liquor Traders’ Council all voiced their concerns at the continued ban.

It was pointed out that nowhere else in the world had there been such a strict ban on alcohol sales, and Moreira said it was important that decisions made were done so based on data.

Representing the Liquor Traders’ Association, Sean Robinson said the alcohol industry had been “cast in a negative narrative” despite the vast majority of South Africans consuming alcohol responsibly.

He added that when the alcohol ban was first lifted, other regulations – including the curfew – had also been revoked, yet the increase in accidents and other incidents had been blamed solely on the consumption of alcohol.

Robinson said he represented 1410 independent liquor traders and more than 14 000 employees nationwide, and stressed that the second ban would definitely lead to the closure of many of its members’ stores.

A liquor outlet licence was dependant on its premises and address, he said, and with many owners not being able to pay their rent, they would unavoidably lose their licences.

CEO of Consol Glass, Mike Arnold and his deputy, Paul Curnow, said there was “very limited time” left to make major decisions about their furnacing plants.

Consol had 14 furnaces, and Arnold explained that these plants could, due to their intricate mechanisms, not merely be switched off. “It takes 10 to 12 days for a furnace to cool off and it would take a long time for us to get going again once we have shut down.” He said Consol was trying to protect its assets, but described the process as being akin to “throwing R200 notes into flames at an estimated R8 million per day”.

Arnold and Curnow explained that bottles were still being manufactured for other beverages and for the food industry but that Consol’s losses already stood at R1 billion, adding that “our margins are narrow”. The company had also cancelled a planned R1.5 billion investment in the business, as “the major risk of deindustrialisation is staring us in the face”.

The tavern industry, represented by Lucky Ntimane from the Liquor Traders’ Council, said the demise of the 34 500 taverns he represented would have an enormous impact on township economies. More than 120 000 people, he said, would be without work and that did not include the estimated 7 000 people who earned an income collecting waste from the taverns. He added that 54% of taverns were run by women who were the breadwinners of their families. The Council, he said, had engaged with the Minister of Police, Bheki Cele and had made proposals on the way forward.

All agreed that education on the responsible use of alcohol was paramount, and that they would welcome engagement with government on how to initiate such educational programs.

Moreira said they were eager to invest in such initiatives, and added that they would support an extension of the curfew.

SAB had been supporting government since lockdown level 5 by providing Personal Protective Equipment (PPE) and offering to assist with the erection of a field hospital and would continue assisting if the needs were made clear.

The panel was in agreement that they would be able to control a surge in alcohol sales should the ban be lifted, as valuable lessons had been learned after the ban was first lifted in July. They were, they said, also in favour of guidelines linked to the sale of alcohol being implemented.

Currently, the group pointed out, illicit alcohol traders were the only ones benefiting from the ban.  Robinson explained that these traders were entrenching themselves in the country but contributing nothing by way of duties or taxes. If the ban was not lifted soon, the reputable traders would have to fight their illegal counterparts for the market, he said.

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