South African Breweries takes legal action against alcohol ban, suspends commitments on jobs and investments

SOUTH AFRICA – 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 investment in the country in five equal instalments of R200 million over a period of five years.

This was revealed by SAB in court papers it filled as seen by Reuters, 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.

“This legal action is the last resort available to SAB in order to protect our employees, suppliers, customers, consumers and all the livelihoods we support.”

South African Breweries

South Africa banned alcohol sales late last month as part of tighter restrictions to rein in the spread of Covid-19.

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Being the third ban on the industry since the outbreak of the pandemic, it is set to escalate the dire situation the sector is in with SAB highlighting that over 165,000 people have already lost their jobs with a further 100,000 moving into poverty.

The alcohol maker has indicated that it supports measured alcohol restrictions but has approached the courts on the constitutionality of the recent ban which the company states it was un-called for as the government had been offered an array of other alternatives to the out-right ban.

“After much consideration, SAB has decided to approach the Courts to challenge the Constitutionality of the decision taken and process followed by the NCCC to re-ban the sale of alcohol.

“This legal action is the last resort available to SAB in order to protect our employees, suppliers, customers, consumers and all the livelihoods we support,” stated the company.

The maker of Carling Black Label, now a unit of AB InBev, says it shares government’s concerns regarding the second Covid-19 resurgence and that it supports all lawful measures that curb the spread of the pandemic, including an earlier curfew to limit movement, reduced indoor and outdoor capacity at gatherings; Measured alcohol restrictions by channel; Heightened law enforcement.

Part of the alternative moves it had presented to the government prior to the ban and which were not put into consideration include restrictions on trade channels, with taverns moving from on- to off-premise trading, in addition to trading days and hours to remaining restricted for off-premise outlets.

Other than loss of livelihood, the restricted trade has fuelled the growth of the illicit market which has devastating impact on not only the health of consumers but also the economy. Cases of looting of alcohol stores have also been on the rise.

Players along the value chain are financially straining with most encountering piling debts on their businesses.

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SAB calls on the government to work closely with the alcohol industry to enable an earliest possible listing of the ban and in order to collaborate in finding lawful and sustainable solutions that assist in fighting the pandemic.

Serving as a light at the end of the tunnel, the restrictions are set to be reviewed by January 15.

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