Fragile alcohol industry warns fourth ban will be devastating
Wine industry body Vinpro, which is arguing that Western Cape provincial authorities should have the power to make alcohol legislation during the state of disaster, will have its day in the high court in Cape Town on April 28 and 29.
The organisation has taken President Cyril Ramaphosa, minister of co-operative governance Nkosazana Dlamini-Zuma and Western Cape premier Alan Winde to court, arguing that provincial authorities are best placed to decide on when and if alcohol restrictions are needed.
Provincial authorities manage hospitals and give liquor licences and as such they are in a better position to make the call, they argue.
Recommendations have been made to the national coronavirus command council to restrict alcohol sales over the Easter holiday period, as there are fears a third wave of Covid-19 infections is around the corner. This means restaurants and tavern owners in townships lose out on revenue. Some in the industry fear a fourth complete ban on alcohol.
The industry warns even weekend sales restrictions could affect it badly with CEO Rico Basson explaining wine farms were in “a fragile state” and were just recovering from previous bans.
Alcohol industry research calculates the three bans meant it sold almost 25% less alcohol over a year, losing R36.3bn in revenue, with 200,000 jobs in both formal and informal sector put at risk. By its estimations, reduced tax paid by the industry value chain from farmers to bottlers and sellers amounted to R29.3bn less in taxes.
Multiple breweries including SAB, owned by the world’s largest brewer AB InBev, also withdrew billions in investment and production facility upgrades in response.
SA Liquor Brand Association CEO Kurt Moore says taking into account the loss of investment of an estimated R21.7bn, “then the prohibition measures can only be viewed as a national socioeconomic disaster”.
He said neither industry nor country could afford any further restrictions.
“A fourth ban on alcohol sales will be devastating to an industry that was decimated by three bans and is only starting its economic recovery.”
He said the industry was in agreement with the reported sentiment of finance minister Tito Mboweni who said: “If that third wave comes it should be managed in such a way that we keep the economy going and protect lives”.
Alcohol bans have been defended by the government as a means of decreasing the number of trauma patients that strain hospital resources when they are battling to deal with Covid-19 patients.
However, the number of hospital patients remains low as the Covid-19 second wave has subsided.
The liquor industry has long called for consultations with the government and felt sidelined by the decisions.
Pick n Pay chair Gareth Ackerman, commenting in his capacity as co-chair of the Consumer Goods Council of SA, warned against banning weekend sales of alcohol from bottle stores.
“Restricting liquor sales — particularly retail sales which enable people to consume liquor responsibly in their own homes — makes no sense in the fight against Covid. No other major country has focused its response on restricting liquor sales.”
He added: “The real priority must be a sensible approach to movements and gatherings, and a significant acceleration in the crucial vaccination programme.”
Boyce Lloyd, CEO for wine and brandy producer KWV, said that even sales bans on some days would affect the battered industry: “In the short term, as most business costs are fixed, every day counts. Discarding the effect of seasonality, every week of lost sales is approximately 2% lost sales over a 12-month period.”
While some producers can sell alcohol when consumers stockpile, Lloyd says many consumers cannot afford to stockpile.
He said most consumers live from week to week, they do not have the funds to “stockpile” for even two weeks.
“Their living conditions are often also incredibly sparse, making storage or even safe storage, probably near impossible.”
KWV would “continue our struggle for survival, keeping our staff employed and try to minimise further negative impacts on their remuneration”, he said.
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