Troubled times ahead for South African Brewers as state reintroduces ban on Alcohol

Hands of three men toasting with beer

SOUTH AFRICA – The escalating Covid-19 pandemic in South Africa has pushed the government to renew its ban on alcohol sales and to further extend its curfew in an effort to contain the worsening situation.

While announcing the new Covid-19 restrictions, South African President Cyril Ramaphosa said: “We are at an extremely dangerous point in our fight against the pandemic. We have no choice but to observe the highest degree of vigilance.”

The pandemic and restrictions imposed to contain it have devastated Africa’s most industrialized economy with the central bank forecasting that gross domestic product will contract 8% this year.

Two previous alcohol bans resulted in 7,400 job losses and 14.2 billion rand (US$974 million) in lost sales for the beer industry, while the government lost 7.4 billion rand in taxes and excise duties, the Beer Association of South Africa said in a statement.

South African Breweries- the continent’s largest brewery- in its third quarter results noted that it lost almost 25% of its revenue because of the ban that the government had put in place to prevent the spread of Covid-19.

Fearing further losses, Alcoholic beverage companies most notably South African Breweries and Heineken have halted planned investments in the sector.

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SAB for instance said it was delaying its US$285 million planned investment while Heineken noted that it would also postpone its US$409 million investment in a new brewery in the country.

“This third ban will do untold economic damage to the beer sector and the 415,000 livelihoods it supports,” it said.

“Instead of a blanket ban, government needs to regulate sensibly and to ensure that those regulations are adhered to.”

The alcohol industry is “deeply concerned” for its long-term survival following the government’s latest actions to prohibit retail sales and onsite consumption, it said in an emailed statement.

The industry, which includes the National Liquor Traders Council, South African Liquor Brandowners Association, Vinpro, the Consumer Goods Council of South Africa, retailers and manufacturers, called for the “urgent and regular review” of the ban after the initial period as the health situation improves.

Restaurants have also lamented the ban noting that 60% of their revenues came from selling alcohol, with that option being closed, many have opted to shut down their premises.

In as much as the country may want to protect the livelihoods of people in the alcohol industry, the country has a duty to protect the lives of its citizens.

The country, which has detected a second and more infectious strain of the virus known as 501.V2, reported a record 14,796 new infections on Christmas day.

Public and private hospitals have been battling to cope with an influx of patients. More than 50,000 new cases have been reported since Dec. 24.

“We have let down our guard, and unfortunately we are now paying the price,” Ramaphosa said. “We can only weather this storm if we immediately and fundamentally change our mindsets.”

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