AB InBev, Heineken halt South Africa projects over booze ban

Prohibition is having far-reaching – and costly – consequences.
Image: Bloomberg

South Africa’s ban on alcohol sales has put investment projects worth at least R12.5 billion on hold.

A day after Anheuser-Busch InBev SA unit South African Breweries said it’s halted plans to spend R5 billion on scheduled plant upgrades, glass manufacturer Consol Holdings said it’s suspending building a R1.5 billion production plant in the country. Heineken also confirmed Tuesday it’s stopped work on a R6 billion brewery.

Read:
SAB pulls the plug on its R2.5bn investment for 2020
Alcohol sales ban costs Consol R8m a day in furnace energy

The announcements are a blow to President Cyril Ramaphosa’s drive to lure $100 billion in new investment to the country by the end of 2023. His administration is facing increasingly vocal criticism over the ban on liquor sales, which the government says it introduced to curb hospital admissions while it fights the coronavirus pandemic.

Pick n Pay Stores chairman Gareth Ackerman said at the grocer’s annual general meeting on Tuesday that the alcohol prohibition, as well as a ban on the tobacco trade, have hurt sales and cash flow. Pick n Pay’s shares have dropped 17% since mid-March, compared with a 3.5% gain on the FTSE/JSE Africa Food & Drug Retailers Index.

Read:
Pick n Pay warns of 50% decline in half-year earnings
Alcohol sales ban costs Consol R8m a day in furnace energy

“The government has on several occasions reassured us that they are listening and consulting, but we see little evidence of this,” he said. “We need government to take us into their confidence when it comes to decisions that affect us all.”

South Africa is among a handful of countries globally that outlawed alcohol as part of an effort to curb the spread of Covid-19. The ban, initially imposed from March 27 to the end of June and then reinstated in July, has cost the industry about 117,000 jobs, according to manufacturers.

The bans have come with “no explanation as to why South Africa is right and so many other countries are wrong,” Ackerman said “What explanations we have been given have been confusing and contradictory. And, sadly, everyone knows that tobacco and liquor remain readily available through the black market.”

Government data shows the alcohol moratorium cost the government R5.46 billion in lost revenue in the first three months of the financial year, compared with 2019-20.

‘Operating uncertainty’

The ban on sales has led to “significant operating uncertainty,” SAB vice president of Finance Andrew Murray said in a statement. The investments that were being considered included upgrades to operating facilities and systems, as well as the installation of new equipment.

Consol, the biggest glass manufacturer in Africa, said the alcoholic-beverage industry accounts for about 85% of sales in the glass-packaging industry. Consumption at restaurants and other hospitality venues — also barred under the government moratorium — comprises about 55% of alcohol consumption volumes, it said.

“The combined effect of Covid-19, the current alcohol ban, ongoing restrictions on on-premise consumption, and lost compound growth will see the South African glass industry decline by an estimated 15% over the next 12 months,” it said.

The 76-year-old company had warned in May that it may be forced to shut some of its furnaces, which cost R8 million a day to keep running, unless the ban was lifted. That would mean a six-to-eight month wait to restart and require international expertise to fire them up again, it said.

© 2020 Bloomberg

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All this would avoidable if we had a functioning, motivated police force.

Ever-since this terrible covid-19 germ made its appearance the global warming scare has just about disappeared. Is there a possibility that the global warmers have found a better scare technique with the covid-19 germ and are determined to keep the world economy in check just to promote their egoistic ways.

You will find very few climate change crusaders WHO are not, also avid promoters/ believers that COVID 19 equals certain death.

The DAVOS crowd refer to it as the great reset. Morons!

This is fantastic NEWS!
The state has failed. … and any investment into SA should stop immediately. This should send a strong signal to the State Capturers that their time is up!

NExt should be taxes. People should stop paying taxes…. State has failed and tax payers need to plug the hole!

Stop paying Tax?

That is when you will see the law working 110% and your assets repossessed.

This is actually a disgrace to the South-African economy. International companies want to invest, yet we impose regulations based on hear-say, a corrupt government and a police force without competent leadership.
If people are policed effectively, if the values and morals of people are supported and taught, no one will have to blame alcohol for fulling up hospitals. In any event, the initial lock-down was to prepare our medical services for the virus. We were not prepared, therefor the existing network had to cope without any significant improvements.
The leadership in SA failed the country, its businesses and its people.

Congratulations on saving a potential 5000-8000 lives and successfully destroying millions of other lives. Maybe it makes sense in the eyes of our leaders. Pat yourselves on the back, you are handling this very well, according to your advisors.

The whole of South Africa is like ragdoll being thrown around. Only this ragdoll cannot be picked up at will and be ready to play again.

If our leaders have the same amount of guts as their egos, they would realize their mistakes, acknowledge it and do something to rectify it. Unfortunately the ostrich with its head in the sand is the only thing visible.

if alcohol is 85% of glass packaging, how is the alcohol ban’s impact only 15% ?

Am I reading too much between the lines from Enoch Godongwana, the head of the ANC’s Economic Transformation Committee?
The reason for the ban on cigarettes and alcohol are to attack WMC, or the Stellenbosch Cabal (as some call the Ruperts). It is to make these businesses either fail or become near bankrupt and then Black business (or ANC-aligned businessmen and partners) will step in to achieve classic Radical Economic Transformation!??
Somewhat on the lines of when these businesses fall, we will come to the rescue and raise them up again!!? Apologies to Mokonyane who was going to lift up the Rand when it fell!!?? This is a concept that is foreign to me in any economic model known to humankind, but maybe my economics degrees missed out on this?

I believe you are spot on. This whole nonsensical lock down rules likewise has had a VERY big anti-previously advantaged slant to it – excuse the analogy.

When the big businesses fail – well, disinvest and move to greener pastures. The ANC will in effect nationalise them – they will run them into the ground and in 25yrs – the companies which have pulled out, will have a chance to return and buy them for 5c/$.

Assuming 25yrs is enough to flush the current ruling generation out of the system – crash and burn is sometimes the only way to a new start.

My farther now deceased for 4years after making 96 always said they wont be happy before we sat behind a bush around afire with them thats where they want to take us.

End of comments.

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