Alcohol industry counts lockdown losses

14 February 2021 - 00:00 By Staff Reporter
The liquor industry is now uncertain as to how long the taps will be allowed to run, and whether sales will be prohibited once more should the country experience a third wave of Covid-19 infections.
The liquor industry is now uncertain as to how long the taps will be allowed to run, and whether sales will be prohibited once more should the country experience a third wave of Covid-19 infections.
Image: Sebabatso Mosamo

Celebrations were muted when President Cyril Ramaphosa finally opened the taps last week, allowing alcohol sales to resume, albeit on limited days.

According to alcohol industry figures, about 51,410 jobs, including 7,044 direct jobs in the alcohol value chain, are under threat after the recent five-week ban on liquor sales that cost the industry up to R9.3bn.An industry assessment of the economic impact of the alcohol ban states that the ban that ended last week caused a R13.6bn loss to GDP, and a R5.5bn loss to the fiscus in direct tax revenues.

The liquor industry is now uncertain as to how long the taps will be allowed to run, and whether sales will be prohibited once more should the country experience a third wave of Covid-19 infections.

Adrian Saville, a professor at the Gordon Institute of Business Science, said SA has had an exceptionally hard lockdown and the impact on GDP has been pronounced in an already fragile economy.

“The injury is made worse or aggravated by the fact that as the lockdown is eased, it’s clear that we haven’t planned the path to vaccination and herd immunity. This is a lose-lose outcome. We have lost jobs, we have lost economic output, businesses have collapsed,” he said.

Saville said some industries could recoverin the long term because people can delay purchases to a later stage. However, industries such as travel, eventing and consumption - which includes alcohol - cannot benefit from delayed purchases, so are unable to recover lost sales.

“Consumption items like restaurant outings or alcohol would be examples of that. If you haven’t been to a restaurant for a month, you don’t go and buy up all of those missed meals or drinks. The sales that [these businesses] lost are gone,” Saville said.

Looking ahead at the budget to be tabled towards the end of February, will the National Treasury still look at raising sin taxes when prohibitions have had such a negative impact on the liquor industry?

Saville said he would be surprised if excise duties were not increased, given that the National Treasury looks at all possible line items “Keep in mind that specific excise duties are modest in the greater scheme of things, contributing R46bn in revenue collection ofR1.5-trillion in 2019/20,” he said.

The injury is made worse or aggravated by the fact that as the lockdown is eased, it’s clear that we haven’t planned the path to vaccination and herd immunity

Meanwhile, Vinpro, the organisation representing the South African wine industry, is awaiting a court date for its bid to compel the government to allow the Western Cape premier - and other premiers in future - to deviate from any future nationwide alcohol sales bans.

The body said the wine-producing industry, which supports 269,000 jobs and generates R55bn in revenue, has suffered under the bans, which caused it to lose R8bn in revenue and placed about 27,000 jobs at risk.

“Despite continuous engagement with government to curb the spread of the virus through the implementation of a risk-adjusted approach to reopening the economy and addressing the ills of alcohol abuse through asocial compact, our proposals were not taken into account when the third ban was introduced on December 28,” the organisation said in a statement.

The grape harvest, which began last month, has also been adversely affected because, with 300-million litres of unsold wine, there is reduced processing and storage capacity, it said.

Vinpro managing director Rico Basson said that the case was set to be heard at the Western Cape High Court on Friday last week. On advice from their legal team they decided not to proceed with the “extremely urgent application for an interim interdict to have the liquor ban lifted in the Western Cape because the court would no longer regard it as extremely urgent due to the partial lifting of the liquor ban.”

“The case, however, is still regarded as urgent and Vinpro now awaits confirmation of a new expedited date,” he said.

• This project was paid for by the South African Liquor Brand owners Association(SALBA) and reported by the Sunday Times


Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.