Liquor companies in talks with government over lifting of South Africa’s alcohol ban

South African liquor producer Distell says that it would prefer a constructive engagement with the government on the ongoing alcohol ban, instead of taking the issue to court.

The company, whose brands include Hunters, Savanna, Nederburg and Richelieu, said that it has primarily been consulting with the government through the National Economic Development and Labour Council (Nedlac).

“While we feel that saving livelihoods and lives need not be mutually exclusive, working together with government to find ways to safely open trade and while taking extreme caution around the spread of the virus,” it said.

“We have been engaging government via Nedlac, and we trust that the process will yield the kind of outcome that both suits the safe re-opening up of trade and safety around Covid.”

Other major players have also indicated that they are cognisant of the ongoing coronavirus and would prefer to engage with the government to reach an amicable outcome.

Liquor industry representatives told BusinessDay that they have ruled out legal action, instead opting for further talks with the government.

“Legal action is something of a last resort and we are not considering it right now. There is a conversation with the government and we are discussing alternatives so there will be no need for legal action,” said South African Breweries chief executive, Ricardo Moreira.

Cost of the ban

This week a number of industry players said that they would halt investments worth more than R12.5 billion due to the ban.

South African Breweries (SAB) says it has halted plans to spend R5 billion on scheduled plant upgrades, while glass manufacturer Consol said it’s also suspending building a R1.5 billion-rand production plant in the country.

Heineken also confirmed it’s stopped work on a R6 billion brewery.

Distell said that it could not comment on the halting of further investments as it is in a closed period, but it highlighted an announcement it made in May where it said it would defer R300 million in South Africa capex which was meant to be spent on various domestic projects.

“Our appeal to all South Africans is to continue to be vigilant around their response to the pandemic,” Distell said.

“Now more than ever before in our history we have a responsibility to work together to flatten the curve such that we can protect lives and livelihoods.”

Earlier this week Distell chief executive Richard Rushton warned that the alcohol ban will have a significant effect on the country’s fiscus.

“We have to ask whether an outright ban on alcohol sales can be justified when the damage outweighs the benefits and there are smarter ways to achieve the same objectives,” he said.

“The alcohol industry has already lost 118,000 jobs and projections show that a nine-week ban now will cost another 84,000 livelihoods and R15.5 billion in GDP.

“The long-term damage will be immense – wine farms, restaurants, glass container manufacturers and taverners are all bleeding and many will not survive.

“We’re facing a structural decline in output capacity in an industry that supports almost 1 million livelihoods and accounted for 3% of SA’s GDP in 2019,” said Rushton.

“I fear the impact this will have on the prospects of an economic recovery for SA, but more importantly, the ability of people who lose their jobs to feed their families.”

Read: Consol Glass halts R2.3 billion investment in South Africa due to alcohol ban

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Liquor companies in talks with government over lifting of South Africa’s alcohol ban