The country's biggest beer maker, SAB, said yesterday that it had abandoned R5billion worth of capital investment projects in South Africa on the 12-week alcohol ban imposed by the government as part of its response to the Covid-19 pandemic. Photo: Leon Nicholas/African News Agency (ANA)
The country's biggest beer maker, SAB, said yesterday that it had abandoned R5billion worth of capital investment projects in South Africa on the 12-week alcohol ban imposed by the government as part of its response to the Covid-19 pandemic. Photo: Leon Nicholas/African News Agency (ANA)

SAB abandons R5bn of capital investment

By Edward West Time of article published Aug 4, 2020

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CAPE TOWN - The country's biggest beer maker, SAB, said yesterday that it had abandoned R5billion worth of capital investment projects in South Africa on the 12-week alcohol ban imposed by the government as part of its response to the Covid-19 pandemic.

SAB finance vice-president Andrew Murray said it would cancel R2.5bn of investment for 2020, while an additional R2.5bn of investment was being reviewed for 2021, due to the ban.

Murray said: “The cancellation of this planned expenditure is a direct consequence of having lost 12 full trading weeks, which effectively equates to some 30percent of the SAB’s annual production.

Yesterday, spirits, wine and cider group maker Distell said the industry had already lost 118000 jobs, and projections showed that a nine-week ban now would cost another 84000 livelihoods.

Industry figures showed the tax loss from the first six-week ban on alcohol sales came to R15.4bn, and if the current ban remained in place for nine weeks, another R13bn would be lost to the fiscus - or three times the annual budget of the National Prosecuting Authority.

Distell chief executive Richard Rushdon said almost 800 small liquor manufacturers, from wineries to craft brewers, faced bankruptcy because of the ban.

The glass container industry, which supports 26300 jobs, was spending R8million a day to keep its furnaces running, but with the alcohol industry making up 82percent of its business, was unable to sell containers.

Murray said the first and subsequent alcohol suspensions had led to significant problems for the group’s operations and across the entire liquor value chain. He said this would affect more than 1million livelihoods across the country.

Murray said the decision to cancel the investments would have an impact on the external supply chain companies that had been selected for these upgrades. He said SAB would continue to try to engage with the government to obtain clarity on when operations could resume.

“The jobs and financial losses magnify considerably when considering the severe impact the suspension is having on communities, as well as the downstream supply chain, including, farmers and other raw material suppliers, tavern owners, packaging and logistics companies, among many others that have had to immediately stop operations, and are facing dire consequences,” Murray said, adding that the significant number of unemployed South Africans faced great risk if they were infected with Covid-19 because they could not afford healthcare, services or products.

BUSINESS REPORT

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