SA booze ban forces Heineken to cut workforce by 7%

SOUTH AFRICA – Heineken SA has announced that it will trim its workforce by 7% in 2021 necessitated by the tough trading environment brought by the alcohol ban.

The brewer says given the continued market pressure in South Africa, it became necessary to restructure its operations and reverse some of the effects of COVID-19 pandemic.

The Netherlands-based company, whose brands include Windhoek, Amstel and Soweto Gold, employs 1 000 people at in its South Africa operations, and with the 7% cuts it means 70 people will be rendered jobless.

“In line with a global review by the Heineken company of its organisation, and in light of the continued market pressure in South Africa, we now find it necessary to restructure our operations in South Africa to build a high performing business fit for the future given the significant impact the COVID-19 pandemic has had on our business in the past year.

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“Unfortunately, this review will mean that we need to reduce the number of employees across some roles. Heineken South Africa employs just under 1 000 full time employees and through this process, will reduce the total workforce by approximately 7%,” Heineken said.

With the move Heineken becomes the first major company in the country to cut jobs due to the ban on sale of booze, in an industry where 165,000 people have already lost their jobs with a further 100,000 moving into poverty.

“The decision to proceed with the retrenchment process was certainly not an easy one to make. Prior to considering this action, the company implemented various cost mitigation measures throughout 2020.”

Heineken Human Resources Director – Yvonne Mosadi

The alcohol maker said it will provide the necessary support to all affected employees, and is following all mandated retrenchment processes.

Employees affected will be supported through company’s employee wellness programme, as well as being prioritised for any available internal vacancies in the future.

The company’s human resources director Yvonne Mosadi said it had not made the decision to retrench easily.

“The decision to proceed with the retrenchment process was certainly not an easy one to make. Prior to considering this action, the company implemented various cost mitigation measures throughout 2020.

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“Unfortunately, given the ongoing challenging situation the company finds itself in, these measures are no longer adequate to manage and sustain the operating costs of the business,” said Mosadi.

Last year Heineken was forced to drop plans to build a R6 billion (US$344.9m) brewery in KwaZulu-Natal.

The company said it will also continue to review its cost and organisational structure to ensure it is fit for the future needs of the business, particularly during this tumultuous period.

The alcohol ban is continually biting into the country’s alcohol industry. The South African Breweries (SAB) has suspended commitments to retain workers and investments, agreed as part of its merger with Anheuser-Busch InBev, due to the country’s decision to ban alcohol sales to curb the coronavirus.

The conditions of the US$106 billion merger which took place in 2016 require SAB to maintain an aggregate headcount of 5,967 workers in South Africa and that AB InBev make a R1 billion (US$67m) investment in the country in five equal instalments of R200 million (US$13m) over a period of five years.

This was revealed by SAB in court papers it filled with the conditions raised to impact jobs in a country which unemployment is at record highs, and investment, which is necessary to grow the already ailing economy.

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