South African economy losses US$328m worth of investment from SAB after cancelling another US$164m planned expenditure

SOUTH AFRICA – South African Breweries (SAB), subsidiary of AB InBev has pulled the plug on another R2.5bn (US$164m) capital investment slated for the 2021 financial year following government’s latest ban on alcohol sale in the country.

At the height of the second ban in August 2020, the brewer withdrew a R2.5bn (US$164m) capital and infrastructure upgrade expenditure for the year and warned that it was considering cancelling the R2.5bn (US$164m) for 2021, which it has now confirmed.

The cancelled investments for 2021 relate to upgrades to operating facilities, product innovation, operating systems, as well as the installation of new equipment at selected plants.

This decision, according to the maker of Carling Black Label and Castle Lager beer will impact on the profitability of and number of jobs created by the companies that would have worked with SAB to execute the capital investment plans.

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“Given the material impact that this third ban on the sale of alcohol has on our business, and the possibility of further bans, we have no choice but to halt these investments for the foreseeable future,” said SAB’s Vice President of Finance, Richard Rivett-Carnac.

The alcohol industry continues to support over one million livelihoods throughout its value chain, across farming, retail, manufacturing, logistics and many SMMEs whose incomes are at stake due to the suspension of alcohol trading.

“Given the material impact that this third ban on the sale of alcohol has on our business, and the possibility of further bans, we have no choice but to halt these investments for the foreseeable future.”

SAB’s Vice President of Finance – Richard Rivett-Carnac

The recent announcement on the shelved investment comes at a time that SAB is in court challenging the government’s decision to re-impose the ban.

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.

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SAB says 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.

“We will continue to knock on all available doors and engage with the South African government to find a way forward that is focused on saving lives and livelihoods alike,” said Rivett-Carnac.

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