South African drink makers meet with government to discuss how to resume trading

Converting bars into beer-collection points and staggering liquor-store opening hours: Just two of the proposals put to South Africa’s government by drinks makers desperate to lift a 50-day ban on alcohol sales.

Industry leaders met with government officials on Friday and had “open-minded, collaborative and constructive talks” about how to resume trading alongside a broader easing of a lockdown to contain the coronavirus, Richard Rushton, chief executive officer of wine and spirits maker Distell Group Holdings Ltd, said in an interview.

Alcoholic drinks may be available by the end of the month, he said, though details on how to trade safely have yet to be finalized.

The so-called booze ban – imposed on March 27 to reduce the temptation for social gatherings and ease pressure on hospital emergency wards – has helped South Africa earn a reputation as having one of the strictest lockdowns in the world.

Tobacco products are also banned, while citizens are only allowed to exercise outdoors between 6am and 9am more than two months after the country’s first case of Covid-19 was discovered.

The tight restrictions have been hailed as a success, with the country’s 219 recorded fatalities a fraction of the deaths suffered in many other countries such as Italy and Spain.

But the move has come at a cost, with millions expected to have lost their jobs amid a deep economic contraction.

As many as 80,000 small businesses ranging from farmers to craft brewers may be on the verge of collapse as a direct result of the alcohol ban, Rushton said.

Distell’s earnings are likely to be as much as 65% lower in the year through June, according to a trading update, with sales of popular drinks such as Klipdrift brandy and Hunters Dry cider halted in the company’s biggest market.

South Africans have instead resorted to home brews, with recipes for ‘pineapple beer’ widely shared on social media and Whatsapp groups, while commercial drinks have been available from illegal sources.

Meanwhile storage facilities have been filling up, with Anheuser-Busch InBev NV needing special permission to transport beer from manufacturing plants to depots to avoid having to pour it away.

With a lot of South African liquor sold through a network of informal taverns and over-the-counter outlets, the industry sees an opportunity to try different business models that don’t involve the congregating of crowds.

There are about 54,000 smaller licensed establishments serving local communities, and the liquor makers have proposed that owners be supplied with masks and sanitizers to hand out to customers and sell drinks only for off-premise consumption.

“Government is really interested in this proposal, with the emphasis on getting our industry responsibly trading,” Rushton said.

As much as 40% of the taverns and smaller outlets are in “grave danger” of going bust if they do not start trading soon, he said.

Staggering hours and providing varied retail options could help South Africa avoid pitfalls seen in countries such as India, where liquor stores suffered a stampede following the lifting of a 40-day ban.

The industry recommended trading be allowed from 9 a.m. to 6 p.m. Monday through Friday and from 9 a.m. to 1 p.m. on Saturday, while allocating buying slots based on the first letter of their family names.

Distell has accepted that bars are not going to open for large social gatherings for some time, so demand for alcoholic beverages will remain relatively low.

The company is exploring alternative revenue streams including the making of sanitizers, the CEO said.

“Forefront for everybody are the health risks around Covid-19, but also the need to get the economy going,” he said. “We are going to come out of this a different company, but a strong, resilient and purpose-driven company.”

Read: Buying alcohol in South Africa could be very different at level 3 – here are new proposals by the liquor association

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South African drink makers meet with government to discuss how to resume trading