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SAB storage: 'Government would be pouring R500m in tax revenue down the drain'

| Supplier news

Tipplers across the country, already suffering from withdrawal because of a nationwide ban on alcohol sales, would be further enraged after South African Breweries (SAB) announced that it could be forced to pour 132 million litres of beer down the drain

The beer has been sitting in tanks because of the lockdown.

The alcohol beverage industry across the value chain is suffering huge losses because of the ban on the sale of alcohol since the National State of Disaster was declared by President Cyril Ramaphosa.

Vice-president of corporate affairs at SAB Zoleka Lisa said: “SAB is respectfully requesting that it be allowed to transport packaged beer from its breweries to its storage depots for the sole purpose of protecting its inventory. Urgent action is needed to avoid material financial losses to both the government and SAB, as well significant job losses.”

Lisa said SAB had been prevented from transporting inventory from its breweries to its depots for safe keeping.

“This is not a request to reopen the trade and allow the sale of beer. Covid-19 is a health crisis and an economic crisis. This request concerns the latter, not the former. Transporting inventory for storage poses negligible additional risk of transmission of Covid-19 and SAB is committed to take all steps necessary to mitigate this risk.”

Currently, SAB has 132 million litres of beer - equivalent to about 400 million bottles of beer - sitting in tanks. Lisa said if SAB was not able to resume transporting inventory in the next 48 hours, it would be forced to discard it, at a loss of an estimated R150m to the company.

“The economic effects for the government would be even more severe. The immediate loss to the government in excise tax would be around R500m, as the state does not collect excise for unpacked beer. This would literally be pouring that tax revenue down the drain, at a time when the government - and the citizens of South Africa - have an urgent need for those funds.”

Tim Hutchinson, chief executive of DGB - the owner and producer of Bellingham, Douglas Green, Boschendal, Brampton, Tall Horse, Franschhoek Cellars and The Old Road Wine Co - said the complete lockdown of both local and export production, distribution and sales has been a crippling blow to the industry.

“South African wine exports were already in double-digit declines prior to the coronavirus so the shutdown will most certainly lead to the failure of a number of wine businesses. The outlook for May remains very uncertain as we don’t know when we can reopen South African operations and unless this happens, I forecast some dire consequences for the wine and spirit sector,” Hutchinson said.

The Beer Association of South Africa (Basa) - representing the Craft Brewers Association, HEINEKEN SA and SA Breweries - has appealed to Ramaphosa to allow off-consumption beer trade to resume.

Basa chief executive Patricia Pillay said: “Despite the challenge of not being operational during the initial 21-day lockdown period, we have adhered to all regulations. However, the complete lockdown has not been without serious casualties.

“In the last 15 days, we have had news of many beer outlets shutting their doors with several people being retrenched. Within this industry that employs close to 250000 people, these are many lives that are now at risk.

“Secondary industries are also impacted by the shutdown including glass and bottle manufacturers, print and design companies, transportation, retailers, equipment manufacturers, electricians, plumbers, farmers and many more.

“Crime is also steadily on the increase, with businesses and depots being looted. Social media has been flooded with incidents of home-made concoctions being sold that are unsafe for consumption.”

Cape Argus


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