Alcohol ban poses a risk to SA’s largest trade partnership

Media Statement

Tuesday, 11 August 2020—The South African alcohol industry notes the concerns raised by spiritsEUROPE at the weekend regarding imbalances in trade between South Africa and European Union (EU) as a result of the continued prohibition on the sale of alcohol in SA.

The EU is SA’s biggest trading partner. The Economic Partnership Agreement signed between the two parties in 2016 allows for export of 110 million litres of South African wines duty-free into the EU region. In return, the EU exports mainly spirit products into Southern Africa. This trade is now constrained due to the extended ban on alcohol sales.

In a statement issued on Friday, 07 August, spiritsEUROPE urged SA “to cancel alcohol prohibition quickly or risk devastating consequences at home and abroad.” The organization which represents largest producers of spirits in the world urged SA government to provide a clear and reliable timeline to quickly lift the total ban on the sale of alcohol imposed as part of the response to COVID-19 outbreak.

Ulrich Adam, Director General of spiritsEUROPE, said, “Banning sales also means banning imports of European spirits, while South Africa continues to export particularly wine which has 110 million litres quota duty-free export into EU under the EPA – contributing to R5,7 billion in net exports earnings for SA on alcohol. Our member companies operating in South Africa are deeply concerned about the uncertainty of current trading conditions. The lack of clarity on whether and when the ban might be lifted makes business planning impossible. We, therefore, need a clear and reliable timeline.”

Sibani Mngadi, spokesperson for the SA alcohol industry, said it was important for the Government to consider the overall effect of the ban when deciding on the next steps in response to COVID-19.

“With progress being made in the health response to the pandemic, it is critical for the Government to limit further the negative impact of the ban in the local economy and on our international obligations as a country,” said Mngadi.

SA economy has already lost an estimated R13 billion in direct capital investments with South African Breweries, Heineken, and Consol Glass all halting their capital expansion projects last week due to the ban.

 

NOTE

The South African alcohol industry includes but is not limited to the National Liquor Traders Council, South African Liquor Brandowners Association (SALBA), the Beer Association of South Africa (BASA), Vinpro, the National Liquor Traders Council, and manufacturers.

Issued by FTI Consulting on behalf of the Liquor Industry. For interviews, or further information, please contact:

salba@fticonsulting.com