The domestic alcoholic beverage market was hit three times in relatively short succession as the government, among others, fumbled its response to the coronavirus pandemic. The industry lost billions in sales and thousands of workers’ livelihoods were placed in a precarious position.
“The value of sales lost for the industry overall as a result of the first and second ban [on the sale of alcohol] is approximately R25bn,” Kurt Moore, CEO of the South African Liquor Brands Association, tells finweek. “Just more than half is from beer (R14bn), followed by RTDs (ready-to-drink at R4.4bn), then wine (R3.5bn) and then spirits (R3.4bn).”
Distell, the second-largest listed liquor manufacturer in SA, alone lost R4.3bn in sales, or approximately 100m litres of volume during the ban, according to Richard Rushton, CEO of the Stellenbosch-based company, in a conference call with investors on 26 August.
The first ban on the sale of alcohol was in place between 27 March and 31 May, with the second in place between 13 July and 17 August.
But it was more than just the two lockdown bans that hit the alcoholic beverage market. The three strikes to the industry were: Firstly, a pre-COVID decline in consumption as consumers tightened their belts in an ailing economy – thanks to the government’s mismanagement of SA’s economy; secondly, the two physical bans on sales; and thirdly, the dawdling of operations at Cape Town’s harbour, which potentially cost local winemakers their cherished export markets, especially in Europe.
Vinpro estimates that the wine industry may lose up to 80 wine cellars, 350 grape producers and 21 000 jobs over the next 18 months.
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