The South African Breweries (SAB) has warned that around half of its front line workforce – 2,000 people – are in the firing line, should it not be able to continue bottling or distribution duties.
According to a Netwerk24 report, the group sent a proposal to the department of trade and industry on Tuesday, in which it said it may be forced to dump 132 million litres of beer – roughly 400 million bottles – if the government does not allow it to package and transport its current inventories between its depots and warehouses.
South Africa is currently operating under level 4 lockdown regulations, which bans the sale and distribution of alcohol. That will change once the regulations are relaxed to level 3.
It also warned of potential job losses. “Urgent action is needed to avoid material financial losses to both the government and SAB, as well as significant job losses,” the company said in the document.
SAB said if it is forced to dispose of its current stock, the company will be forced to operate at 50% of its capacity for four months, which could result in a loss of 2,000 jobs.
An additional 75,000 jobs could be adversely affected by the company’s supply chain, SAB reportedly said in a statement.
The company currently employs around 5,700 workers in South Africa.
SAB has suggested that the government can take a more measured approach to the sale of alcohol, including limiting the amount of alcohol that can be purchased, introducing online sales, trading hour restrictions for stores selling for personal consumption, and opening up sales of lower alcohol by volume (ABV) products only.
AB InBev disappoints
Anheuser-Busch InBev (AB InBev), the world’s largest brewer, said on Thursday (7 May) that April shipments fell 32% because bars and restaurants were forced to close during lockdown periods in some of the market’s in which it operates, including South Africa.
“We expect that the impact on our 2Q20 results will be materially worse than in 1Q20. This has already become evident in our April 2020 global volumes, which declined by approximately 32%, primarily driven by the closure of the on-premise channel in most markets and government restrictions imposed on certain operations of ours in connection with the Covid-19 pandemic,” it said in a statement.
Revenue declined by 5.8% to $11 billion, materially impacted by lower volumes resulting from the Covid-19 pandemic, while total volumes declined by 9.3%, with own beer volumes down 10.5% and non-beer volumes down 0.2%, it said.
For the quarter ended 31 March 2020, the group reported a net loss of $2.25 billion compared with a profit of $3.57 billion a year earlier.
Normalised earnings before interest, taxes, depreciation and amortisation, was $3.95 billion compared with $4.80 billion for the first quarter of 2019.
For its South African operation, which includes South African Breweries (SAB), having acquired the entire SABMiller company in 2016, AB InBev said that in 1Q20, volume and revenue grew by low-single digits, as a strong performance in the first two months of the year was partially offset by the impact of Covid-19 in March.
It said that restrictions on the sale of alcohol in all channels and social distancing measures were implemented in mid-March, with a complete shutdown beginning on 27 March 2020, “significantly impacting our volumes”.
“Our brewery and distribution operations have been severely restricted by current government mandates,” it said.