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SAB pulls the plug on its R2.5bn investment for 2020

As it experiences continuous strain on its finances due to the liquor ban.
Expenditure on upgrades to facilities, systems and equipment will no longer be happening. Image: Waldo Swiegers, Bloomberg

South African Breweries (SAB) will no longer be investing R2.5 billion in its annual capital and infrastructure upgrade programme this year.

The brewer said this is a consequence of the Covid-19 lockdown-induced ban on liquor sales for the past 12 weeks. It has effectively lost 30% of its annual production.

More than a million livelihoods affected

SAB vice president of finance Andrew Murray says the company has been hard-hit by the lockdown and its stringent regulation on the sale of alcohol.

“This decision is a result of the first, and current, suspension of alcohol sales which has led to significant operating uncertainty for ourselves, our partners, as well as colleagues in the industry, including participants in the entire value chain, and which impacts over one million livelihoods across the country.”

Initially, it had intended to invest R5 billion over the next two years. The R2.5 million planned expenditure for the next financial year remains under review.

The investments that were being considered included upgrades to operating facilities and systems, as well as the installation of new equipment at selected plants.

“This decision will also have an impact on the external supply chain companies that had been selected for these upgrades,” SAB says.

It forecasts that the jobs lost across the entire industry as a result of the alcohol ban will soon reach 120 000, while the excise tax lost from the first ban is sitting at over R12 billion.

Read: Unions want clarity on state’s plans to support liquor industry workers

“The jobs and financial losses magnify considerably when considering the severe impact the suspension is having on communities, as well as the downstream supply chain, including farmers and other raw material suppliers, tavern owners, packaging and logistics companies, among many others that have had to immediately stop operations and are facing dire consequences,” it states.

Government asked to review research report

Last week, SAB and other alcohol industry leaders requested the government to review the South African Medical Research Council (SAMRC) report that influenced its decision to ban alcohol sales.

The industry said: “The incomplete nature of the data used in the modelling makes it difficult to accurately determine the extent of the link between trauma admissions and alcohol abuse.”

It disputed the SAMRC’s finding, saying that the reason for each trauma is not captured by the hospitalisation data provided in the report and there is no information on whether the trauma cases resulted from alcohol use, or from any other cause.

“The model, therefore, may be able to predict the total number of potential trauma cases prevented; however, it remains uncertain as to the extent of the relationship between alcohol consumption and the number of trauma admissions in SA hospitals,” it said.

Sibani Mngadi, representing the South African alcohol industry, urged the government to review the report on that point.

“We would encourage the government to take note of this independent review of the SAMRC report and of the limitations in the data reported, and engage with our industry to find an urgent solution to lifting the suspension on alcohol sales,” said Mngadi.

“This will enable our industry to return to some form of operational normality.”

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Heineken is holding off on their R6 billion upgrade as well.

BAT almost closed down all local manufacturing a year or so past. If prime minister Nannyzana Dlamini-Zuma doesnt lift the bans theres a real probability that this time they will.

And all these have knock-on effects across the value chain to other business and industries.

They are not “holding off”. Pretty sure they are moving along- policy certainty is what attracts investors, not a bunch of buffoons falling over their own feet to rob the citizens of their livelihoods.

I agree with your assessment. Also think Heineken is just being diplomatic and dont yet want to say they have pulled the plug.
Even though thats probably what they will do.

both industries harm people. So it is not a bad thing they are banned. The bad thing is the illicit economy that is growing because of it and the police are doing nothing about it.

Thick as two planks.

So do cars. According to this profoundly ignorant “reasoning” from Duh-duh-pe, let’s ban motorized vehicles and revert to a precivilized society.

Perhaps.
They do however employ people, pay taxes, create business for other industries like glass and packaging, transport, labeling, etc. Add to sales for retailers and restaurants, provide diversification for farmers along which tobacco is one of the few crops that can be profitably cultivated on small scale.
Farmers sales translates into employment for low skills and educated people, orders for fertilizers and chemical companies, manufacturing and mining (eg steel to build pivots) and loads of heavy machinery and implements. Diesel and rubber to run tractors with. Heavy users of electricity.
And so on and so forth.

But if we are going to ban harmful industries why stop here?
Lets ban sugar. And all cool drinks. Preservatives in food. All gambling. Howabout television and I am sure down this slope we will also ban telecoms and microwaves for irradiating us.
Lets shut all coal and gas power plants. Lets close all mining.
No more nuclear.
While we are at it, lets ban oil.
Just google how many things depend on petroleum.

Lets ban everything thats harmful and go back to au naturel.

Tongaat Huletts and Illovo also shutting down then? SAPS? SANDF? Trade Unions? ANC? All food manufacturers? Lion match? Banks? Mines? Water? Who else must fall to erase all risk to mankind? Oh, the sun! The evil evil sun!!!

I have a funny outlook on life. People should be allowed to predestine their own futures. Rights and responsibilities yeah?

Dadaap.stop watching looney tunes.

There is obviously an ulterior motive. No adult human can be this dumb.

They are trying to preserve critical care beds at a cost of millions each per week AND WE HAVE NEVER NEEDED THEM!!!!!!!!!!

Go check the cost.

In KZN less than 30 critical care beds in use at the moment????????

I guess being rich does not mean you are clever after all.

Whahahaaaa. This lot.

How much revenue “WOULD THAT HAVE CREATED” for government?????? You gotta love these on the job trainee’s in government.

It sounds bad upon first glance. However this is a blessing in disguise for this country. How many murders and crimes occur on Alcohol?! I see people already looking fitter and healthier in this country. Alcohol is too easily available everywhere to the detriment of our society. It is a GOOD thing that it has been banned!

There is already more productivity in the economy. May God bless South Africa always. Fixed Investment is still up and so is our trade surplus. Thanks SAB but no thanks!

Cars and especially taxis harm people too. So do kitchen knives, when used during crimes. Lets ban them all and praise the Lord that we then have to walk and be unable to cut the Sunday roast.

I cut myself with a steak knife while cutting a carrot. It’s not just criminal behaviour. All non-plastic non-butter knives must fall!

The problem is that we are all treated like the lowest common denominator. If I have a beer or glass of wine, I don’t murder anyone and i don’t beat up my wife. I am however been treated like someone who does. I can live with the ban – it’s merely an irritation for me. What this does do however is make me treat all ANC politicians like criminals who steal from the poor to feed their greed. I will not be funding this gluttony with my hard earned money.

Dadape:

Please clarify whether you are :
1. Employed in government or one if their PR firms?
2. genuinely a believer in these regulations?

I like your positivity in the face of all these trump styled conspiracy posts, but I am battling to place your singularly one-sided opinions. How the hell are you such an optimist is basically my question

Do not confuse an idiot with an optimist.

Ramaphosa halting expansion and bankrupting people.Sick !

To some extend it is very sad that so many livelihoods are dependent are things that harm us in many ways. However outright bans on balance seem to be causing more harm than the good that was intended. As that phrase goes, the road to hell is paved with good intentions.

To me it seems as if the ANC is just so out of touch on the SA reality. So we’ve a booze problem, alongside many other problems, this has been an open secret for some time now. Why act only now and where is the long term policy to deal with the underlying cause and effect

End of comments.

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