SAB to pump US$63.2m in two South Africa based breweries to ignite economic growth

SOUTH AFRICA – The South African Breweries (SAB) seeks to invest a further R920m (US$63.2m) into its Prospecton and Ibhayi breweries, reaffirming its commitment to ignite the South African economy.

Its Prospecton Brewery in Durban will receive the lion share of the investment with a total of R650m (US$44m) that will help expand its facilities. This investment alone will provide a R1.2 billion (US$82m) excise tax impact.

A further R270m (US$18.5m) of the funds will be committed to upgrading SAB’s Ibhayi Brewery which is in the Eastern Cape.

“These investments will give us the capacity to not only contribute to the economy but also to be able to contribute to job creation, tax, excise and procurement spend,” said SAB CEO Richard Rivett-Carnac.

To add to the impact, he said the investment will enable SAB to continue transforming the industry by employing black suppliers such as HTP and Isanti glass.

The pledge follows SAB’s commitment to invest R2 billion (US$137m) into capital expenditure projects in their 2021 financial year, which it channelled into several upgrades at its operating facilities and providing some exciting product innovations.

It brings SAB’s total South African investment commitment to R4.5 billion (US$309m) – adding impact to an industry that already contributes 1.3% of the national GDP and sustains over 250 000 jobs.

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The move was fanned by the pursuit of economic recovery and government support in the wake of uncertainty brought by the COVID-19 lockdowns.

“The Budget delivered by the Minister of Finance in February ensured that economic recovery was prioritized by keeping the beer excise adjustment closer to inflation.

“This has provided us with the financial space to grow the beer category responsibly and aid our government in our collective mission towards economic recovery and growth,” said Rivett-Carnac.

According to Rivett-Carnac, the beer industry continues to be a key contributor to the South African economy.

He cites a recently published Oxford Economics Research paper (2021) which reveals the South African beer industry contributed approximately R74 billion (US$5 billion) to South Africa’s GDP in 2019. This was equivalent to 1.3% of national GDP.

The sector sustained over 248 000 jobs in 2019, equivalent to 1.5% of national employment. The tax impact was approximately R45 billion (US$3.09 billion) in 2019, this was the equivalent of 3.3% of government revenue.

“Our position as an economic-driving, multinational corporation in South Africa means we are keen to play a role in working with our government and social partners to help South Africa recover and grow,” said Rivett-Carnac.

As the maker of Castel Lager continues to pump in funds to drive productivity, the brewer is also focused on running its operations sustainably as it recently inked a Power Purchase Agreement with a Black-Woman Owned industrial scale biogas waste-to-energy company, Bio2Watt, to power its operations with renewable energy.

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