How lockdown ban hit SA’s alcohol industry
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Cape Town - An impact assessment on the trade of alcohol during lockdown, compiled by the Western Cape Department of Agriculture, has found micro cellars and craft breweries were hardest hit by sales bans.
Titled the Economic Impact of Government Restrictions on Domestic and International Trade of Alcohol, Optimal Agricultural Business Systems did the research, and the Bureau for Food and Agricultural Policy did the modelling.
It summarised, among other findings, that the smaller players in the industry were hardest hit by the trade ban, while bigger, particularly foreign-based multinationals, were the least affected.
It noted that 30% of craft breweries have already closed their doors, and 90% of the balance are at risk.
“Compared with the 2019/20 harvest, wine prices received in the 2020/21 harvest is down 18%, leading to a decline of 77% in the net profit of wine farms.
“The implication is that the average net profit is R33 160 per hectare below the level of long-term sustainability.
“At the farm level, gross margins declined by more than 50% to as low as R3 500 per hectare during 2020. This leaves minimal scope for overheads, depreciation, interest, taxes, etc.”
According to the report, an estimated 165 000 jobs were already lost and investments valued at R6 billion were suspended. The GDP loss amounted to R51,9 billion and R29,3 billion was lost in tax revenue.
Western Cape MEC of Agriculture Dr Ivan Meyer said that while the figures reflect the national impact of the blanket ban on liquor sales, it was worth noting that 95% of the wine industry is located in the Western Cape, and “so it was extremely devastating for our provincial economy”.
The Beer Association of South Africa (Basa) meanwhile, welcomed the move to alert level 3 by President Cyril Ramaphosa on Sunday, but added that it was cold comfort for many businesses that have not survived the alcohol bans.
They said it was, therefore, critical that those that have managed to stay afloat are still compensated through the Covid-19 Unemployment Insurance Fund Temporary Employer/Employee Relief Scheme.