SA's glass packagers face R1.5bn hit from alcohol ban — Consol

19 January 2021 - 07:52 By Reuters
Glass bottle maker Consol says SA's glass packaging industry could lose a further R1.5bn in sales if the latest ban on alcohol sales continues for long..
Glass bottle maker Consol says SA's glass packaging industry could lose a further R1.5bn in sales if the latest ban on alcohol sales continues for long..
Image: 123RF/BRENT HOFACKER

SA's glass packaging industry could lose a further R1.5bn in sales if the latest ban on alcohol sales continues for long, the CEO of glass bottle maker Consol said on Monday.

SA has recently banned alcohol sales for the third time as part of efforts to free up space for Covid-19 patients in hospitals burdened with alcohol-related injuries.

The first two bans together resulted in losses of more than R1.5bn to the glass packaging industry, Consol CEO Mike Arnold said in an e-mailed response to questions.

Arnold also warned of likely job losses at Consol and most parts of its supply chain, adding any major extended loss of demand, at short notice, was “catastrophic”.

The company, which supplies wine, spirits and beer bottles, is spending R8m a day to keep production and furnaces running even as orders run dry, Arnold said, adding its debt was also piling up.

Consol is not yet suspending or cancelling investments, as this will depend on the duration of the ban.

It has, however, reallocated R800m meant to rebuild and maintain its current furnace capacity and footprint at home towards maintaining operations during the lockdown.

The reallocation will result in Consol not being able to fund the repair of furnaces reaching end of asset life, even if glass demand recovers, Arnold said.

Last August, Consol indefinitely suspended construction of a new R1.5bn glass manufacturing plant due to reduced demand.

SA Breweries, part of AB InBev and a Consol customer, last Friday cancelled 2.5 billion rand of investment earmarked for 2021.

This, and likely similar moves by other customers, “are likely to have a medium-term knock-on effect on sales volumes, capital expenditure and the general financial stability of the business and our supply chain,” said Arnold.


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