Stats SA has published its latest preliminary tracking of the food and beverages industry to July 2020, covering the worst of South Africa’s lockdown and the impact it had on the sector.
The latest gross domestic product data presented by the group showed a massive decline in the second quarter of the year of 16.4% quarter on quarter (or 51% on a seasonally adjusted annualised basis).
Contributions to the negative figure came from all but one sector of the economy (agriculture), with construction, manufacturing, mining, transport and communication, and trade all registering declines of over 67% for the quarter.
Year on year, South Africa’s economy declined by 17.1% in the second quarter.
In Stats SA’s latest breakdown for the food and beverages industry, restaurants, take-aways, cafés and catering services saw declines of up to 100% over the three months to July 2020, with zero sales recorded for restaurants in April – when hard lockdown was in full effect.
While lockdown restrictions have since been lifted and eased over the past few months – with this week marking the first of lockdown level 1, which is an attempt to get the economy back into full swing – data to July shows that the pathway to recovery to pre-lockdown levels will be a long one.
Adjusted for season variations, revenue from the sector decline by 96% year-on-year in April 2020 during lockdown level 5, equating to a loss of around R4.5 billion compared to the prior year. In May, the loss narrowed to 88% (R4.2 billion), before recovering further to -60% (R2.9 billion) in June and -53% (R2.5 billion) in July.
Over the period, over R14 billion in revenue (YoY) was lost due to the various levels of lockdown and the impact it had on the wider economy.
One of the biggest sticking points for restaurants and lockdown was alcohol sales, which were effectively prohibited until lockdown level 2, with only a brief period of sales being allowed in June.
The sale of alcohol was banned under the hard lockdown, which commenced on 27 March 2020. Alcohol sales were allowed under lockdown level 3 (starting 1 June), but were banned three weeks later as alcohol-related trauma cases mounted at hospitals during the Covid-19 peak.
Restaurants lamented the restriction on the sale of alcohol as it removed a major revenue source from their operations, with many going as far as to say that without alcohol sales, it would not be viable to operate at all.
The Stats SA data shows that pre-lockdown, bar sales (which includes all beverages) at restaurants make up approximately 10% of revenue. In the sector as a whole, these sales reflect approximately 7% of total sales.
Under lockdown all bar sale revenue were removed (over R200 million a month).
Alcohol restrictions remain in place under lockdown level 1.
While restaurants have been allowed to sell alcohol for on-site consumption since August 2020, restaurants attached to wine farms and similar venues are not allowed to sell alcohol to diners to take home over weekends.
Agricultural industry group Agri SA has described this restriction as a ‘punch in the gut‘ for farms, who rely on this revenue to remain operational and sustainable.
The group said that the continued restrictions will have an extremely negative impact on the sustainability of wine farms which attract a large number of visitors and tourists, particularly over weekends.
Wine farms rely on direct sales from cellars for home consumption and that the industry is being denied an opportunity to recover economically.
Vinpro, a non-profit company which represents 3,500 South African wine producers in the country, said that the wine sector is a major contributor to domestic and international tourism in South Africa.
Government has explained that the weekend restriction on alcohol trade remains in effect as a precaution, arguing that with the Covid-19 virus still in play in South Africa, opening up alcohol sales too quickly could lead to further outbreaks.
Cooperative Governance minister Nkosazana Dlamini-Zuma said that alcohol consumption lowers inhibitions and “when people start drinking, they get drunk, they forget the mask, they forget social distancing.”
No exemptions to the restrictions have been granted.