South Africa alcohol industry calls on government support, rational decision making

SOUTH AFRICA – The South African wine industry is calling on government to join hands in rebuilding the sector towards a sustainable future by creating an enabling environment through sound policy decisions, infrastructure investment, stricter enforcement with regard to illicit trade, as well as financial support and relief.

The wine industry plays an important role in the agriculture sector, contributing R55 billion (US$3.6 billion) to GDP (1.1%) and supporting 269 096 employees in the total wine value chain.

The country’s wine body, Vinpro has warned against further alcohol restrictions, which it says have caused significant damage to legitimate businesses – from a large number of small and medium wine businesses, particularly in the wine tourism sector, to wine grape producers and cellars, which include several black-owned enterprises – with 28,000 jobs already lost.

“We urge the government to stop these crisis-driven Covid-19 related prohibitions on wine which have promoted the development of parallel illicit markets, plunging our industry into a financial abyss and reducing much-needed government revenue.

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“We want the government to combat illicit alcohol trade and create fair and open competition in the domestic market by enforcing the laws that already exist,” Vinpro said.

The lobby body appealed for financial support and relief in order for the sector to recover and rebuild and provide livelihoods.

Further to that, Vinpro called for efficient infrastructure and service delivery such a fully operational port, and unlock additional access to water, while improving the ease of use of alternative energy sources.

In addition, because wine is a cyclical product, Vinpro has urged the government to engage effectively and timeously with the industry on liquor-related policies and legislation to ensure a more conducive trading environment.

“We ask for a clear taxation methodology as agreed with Treasury for wine-related products and an annual excise adjustment of below CPIX as the excise rate is already above the target incidence rate for wine and brandy.

“A clear policy framework with regard to beneficiation and inclusive growth in terms of access to existing and new water resources is also non-negotiable,” it said.

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BASA weary of another alcohol ban

Meanwhile, the Beer Association of South Africa (BASA) has also warned that the government could introduce another alcohol ban in South Africa should a fourth wave of Covid-19 infections hit the country over the December holiday period.

The association, which includes the Craft Brewers Association, Heineken South Africa and South African Breweries (SAB), is concerned that another ban over a critical period could further damage the industry and lead to job losses.

The group has written to Trade, Industry and Competition minister Ebrahim Patel requesting his urgent intervention at a Cabinet-level to ensure that “irrational alcohol bans are no longer imposed, especially over the festive season, which is a critical time for the local industry”.

The previous four bans saw the beer industry losing 161 days of trade since March last year, putting just over 240,000 jobs at risk, with a tax revenue loss of R34.2 billion (US$2.24 billion) and R10.2 billion (US$668m) lost in excise revenue.

“No government funding or relief has been provided to assist our sector throughout this crisis, which has resulted in many small businesses being forced to close their doors permanently, including 27 craft breweries,” BASA said.

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