The South African Liquor Brand Owners Association (Salba) and the business community have welcomed the government’s partial relaxation of the alcohol ban. Photo: Henk Kruger/African News Agency (ANA)
The South African Liquor Brand Owners Association (Salba) and the business community have welcomed the government’s partial relaxation of the alcohol ban. Photo: Henk Kruger/African News Agency (ANA)

Business and Salba welcome the partial lifting of alcohol ban

By Philippa Larkin Time of article published Jul 26, 2021

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THE South African Liquor Brand Owners Association (Salba) and the business community have welcomed the government’s partial relaxation of the alcohol ban.

President Cyril Ramaphosa announced on Sunday that the sale of alcohol for off-site consumption would be allowed from Monday to Thursday between 10am and 6pm, while on-site sales would be allowed until 8pm.

He also provided financial relief for the sector by deferring excise taxes for three months for the alcohol sector.

Salba chief executive Kurt Moore welcomed the three-month deferment of about R2.5 billion worth of excise taxes that Salba had applied for at the beginning of the latest ban.

Business Unity South Africa as well as Business Leadership SA in statements today welcomed the government’s relaxing of the booze ban.

The Beer Association of South Africa, which comprises the Craft Brewers Association, Heineken South Africa and South African Breweries, said on the weekend that its latest estimates revealed that the four alcohol bans, which have forced businesses to close their doors for 161 days, had put 248 759 jobs at risk and cost the country’s gross domestic product an estimated R64.8 billion.

These figures did not take into account the recent looting of liquor outlets and distributors in KwaZulu-Natal and Gauteng, which saw R500 million worth of alcohol entering the illicit market and 332 businesses being destroyed, it said.

Sibani Mngadi, the chairperson of Salba, said: “The partial opening of sales as well as three-month deferment in excise tax payments due on alcoholc beverages is a huge relief, but we are nowhere near being out of the woods, especially for the off-site consumption outlets that continue to be restricted to trading Monday to Thursday with no rationale or evidence provided for this decision, in spite of our many requests to secure this from the government.”

He said the government’s use of prohibition in response to the Covid-19 pandemic has had devastating consequences.

He said there had been no justification for the prohibition – implemented with no warning, no consultation and poor empirical justification – that prevented legitimate businesses supporting more than 1 000 000 livelihoods across South Africa from operating. These included businesses in the agriculture, tourism, hospitality and manufacturing sectors, and importantly, hundreds of thousands of small, medium enterprises.

“Right now, our focus is on economic recovery, and the role our industry can play is critical,” said Mngadi.

Mngadi said legal businesses needed to be allowed to trade without the continual risk of further bans.

“The irrational and arbitrary bans have threatened the lives and livelihoods of tens of thousands of people. In addition, the recent looting and destruction of liquor stores have left many small traders and independently owned liquor stores in financial ruin, some of which may never recover. The combined impact of the alcohol bans and recent looting has also caused irreparable reputational damage to South Africa from an investor confidence and international tourism perspective,” he said.

“These bans are harmful to both government and business revenue and they are serious threat to jobs. In fact, 248 759 jobs are still at risk across the industry – about 1.59 percent of the national total of formal and informal employment for 2020. In addition, the alcohol industry lost 161 days of trading between March 26 last year and July 25 this year due to the government’s alcohol bans. Even before the cost of the looting to the alcohol industry is factored in, the four alcohol bans have already cost the country’s GDP an estimated R64.8bn, or 1.3 percent, of GDP,” said Moore.

The industry repeatedly warned and demonstrated via research that the bans had fuelled illegal activity, particularly among crime syndicates whose positions were significantly strengthened during prohibition. It will be difficult to reverse this as syndicates have become entrenched.

“Illicit trade has reached 22 percent (nearly a quarter) of total market volumes in South Africa – worth R20.5 billion in sales value. This has cost the fiscus R11.3 billion in tax revenues at a time when the country can least afford it,” said Moore.

Brewer Distell on Friday warned in its trading statement for the year ended June 30 this year that the industry had repeatedly warned and demonstrated via research that bans fuel illegal activity, particularly among crime syndicates who are significantly strengthened during prohibition.

“It is becoming increasingly difficult to reverse this as syndicates become entrenched. The recent unrest demonstrates the unfortunate effect syndicates have in an environment where poverty and unemployment have been exacerbated by the pandemic,” the firm said.

“We estimate that 332 of our direct and indirect customers have been adversely affected by looting during the recent unrest. This has added to the quantity in illicit hands, over and above robbing future sales from licensed small-to-medium enterprise (SME) business owners.”

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