MEDIA RELEASE: 22 May 2020
The alcohol industry is committed to helping restart the country’s economy to save the livelihoods of our people while at the same time taking appropriate safety measures to curb the spread of the pandemic. As an industry, we create employment for over one million people across the value chain, contribute 3% to the GDP of South Africa’s economy, and make an indirect tax contribution — VAT, customs and excise revenue — of R51bn. The alcohol industry, therefore, urgently calls on the government to reopen the manufacturing, distribution, and trade of alcohol during level three of lockdown.
Following recent engagements with government, industry associations, South African Liquor Brand Owners Association (SALBA), Beer Association of South Africa (BASA) and VinPro, have submitted various proposals to the Department of Trade and Industry and Competition which included safety protocols for the manufacturing, distribution and trading of alcohol. The protocols address transmission risks across the value chain and enables the safety of the workforce, suppliers, retailers, farmers and consumers.
To allow for taverns to be economically included, we have requested taverns and microbrewers be granted an off-consumption trading license to enable them to trade legally. To prevent the situation seen in countries like India, industry has proposed the opening of more legal channels on sufficient days and allowing adequate time to make purchases to enable consumers to maintain social distance protocols.
A “click and collect” model has been developed for the 34,500 licensed taverns, which will ensure that social distancing is adhered to, as people will not be queuing to purchase. In discussions with tavern associations, they have committed to ensuring adherence to health and safety regulations, as well as social distancing at all times. Part of the support for taverns would include the initial free supply of personal protective equipment packages, including sanitisers, masks, gloves, as well as education and training material to meet strict safety protocols.
The alcohol industry lost an amount of R12,9 billion per year to illicit trade pre Covid-19, which converts to a loss of R6,4 billion to the National Treasury. The SARS commissioner Edward Kieswetter has confirmed that alcohol is still being sold and that the illicit trade of alcohol is thriving. Therefore these numbers would have increased exponentially. The losses are being quantified at present.
The illegal manufacture of alcoholic concoctions poses serious health risks and increases the burden on hospitals. Pineapple prices have increased by 200% due as homebrewers turn to making their own illegal beer. There are also incidents of black market price extortion taking place, where products are being sold illegally at double to triple normal prices. Research has found that in poorer households, this means scarce income is being diverted to alcohol. For example, a bottle of Klipdrift 750ml sold at R300; a bottle of Jameson’s 750ml at R1 000; and a 330ml can of beer for R70 – more than double the normal price.
Looting of licensed liquor outlets continues to be a risk with 476 liquor outlet robberies reported nationally during the lockdown. Closing taverns during the extended lockdown will cause permanent damage to these legitimate small businesses, while the unlicensed liquor trade will likely continue to operate outside the remit of the law. A legal alcohol industry is a more economically efficient force against illicit activities compared to investing and diverting valuable state resources in enforcement to fight illicit trade.
The eight-week domestic lockdown as well as the five weeks without exports, has already resulted in the loss of 117,600 jobs. In the craft beer industry alone, there is a further 64% that will not meet their payments by the end of June and 13% have given notice on their premises and announced their decision to staff of their shut down. The 540 wineries have indicated that they will be unable to meet 70% of their payroll obligations at the end of June.
As an industry, we have expressed our willingness to partner and open our distribution networks — including collaborating with the government — to offer the alcohol industry’s entire distribution network to supply PPE to even the most remote clinics and deliver vital goods to communities most in need including educational material
With no/minimal revenue for eight weeks and no certainty of the future, the industry cannot sustain the ban any further and job cuts are a harsh reality. We hope that the gravity of the current situation is taken into serious consideration by decision makers, as the livelihoods of many people rests in their hands.
Issued by FTI Consulting on behalf of the Liquor Industry
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