South Africa’s alcohol industry players plan to cut down on investment and to stop hiring. The alcohol ban in South Africa coupled with the lockdown measures to curb the spread of coronavirus have hurt the alcohol industry.
Alcohol sales were prohibited in the initial lockdown in March, relaxed midway, and later reintroduced in mid-July following a resurgence of coronavirus cases.
Firms in the sector have halted expansion plans and hiring.
Heineken South Africa
Heineken South Africa announced on Monday that it will reassess a number of its expansion ambitions including exploring the establishment of a brewery in Kwa Zulu Natal. The planned R6 billion investments would have created a potential 400 direct jobs and numerous other indirect jobs.
Heineken cites difficulties in the micro and macro-environment that have put immense pressure on the industry. In South Africa, the total volume has declined due the prolonged ban on the sale, distribution, and production of alcohol.
Heineken SA cut executive salaries by 20 percent from May to December with no bonus pay.
South African Breweries
South African Breweries (SAB), the country’s largest brewer, on Monday announced the cancellation of ($290 million) R5 billions of scheduled investments. SAB says the cancellation was a culmination of 12 weeks of trading lost during the lockdown period translating to 30 percent of the brewer’s annual production.
The brewer says that it suffered revenue losses in the three months the ban on alcohol has been applied. SAB cancelled R2.5 billion in planned capital and infrastructure upgrades for 2020 and another R2.5 billion for 2021 is under review.
Another South African drinks maker, Distell, warned that the cost of prohibiting alcohol sales was outweighing the benefits. The firm says that the prohibition will have ripple effects on wine farms, restaurants, glass manufacturers, and tarveners.
Distell says that the nine week ban has already cost 118,000 jobs and is likely to cost 84,000 livelihoods and R15.5 billion in GDP.