SAB to invest R920m in its Prospecton and Ibhayi breweries

Group ups local investment commitment to R4.5bn at the latest SA Investment Conference.
The Prospecton Brewery of SAB in Durban will receive the bulk of the new investment, with a total of R650 million that will help expand facilities at the plant. Image: Kevin Sutherland/Bloomberg

South African Breweries (SAB) announced a further investment of R920 million into the local economy on Thursday, with the money earmarked for expansion and upgrades to its Prospecton and Ibhayi plants, located in Durban and Gqeberha in the Eastern Cape.

Revealing the new investment during the 4th SA Investment Conference in Sandton, SAB CEO Richard Rivett-Carnac said this further announcement effectively ramps up SAB’s total investment commitment in the country to R4.5 billion.

The investment by SAB, which is controlled by JSE-listed global alcohol giant Anheuser-Busch InBev SA/NV, comes despite the impact of Covid-19 lockdowns and related liquor bans that have seen the industry lose billions of rand in sales over the last two years.

It also comes in spite of the July riots, with SAB’s premises at Prospecton and Pietermaritzburg in KwaZulu-Natal being also targeted last year.

“These investments will give us the capacity to not only contribute to the economy but also to be able to contribute to job creation, tax, excise and procurement spend,” said Rivett-Carnac.

Read: Liquor industry wants state of emergency following looting, property destruction

According to SAB, its Prospecton Brewery in Durban will receive the bulk of this new investment with a total of R650 million that will help expand facilities there.

“This investment alone will provide a R3.1 billion additional tax revenue and generate 24000 jobs through the full value chain. Additionally, the investment will generate R4.4 billion in additional GDP for the KwaZulu-Natal economy,” it said.

A further R270 million will be committed to upgrading SAB’s Ibhayi Brewery in the Eastern Cape.

Rivett-Carnac said that this new investment commitment of R920 million will inevitably have an impact on jobs through direct and indirect employment – adding to the already 250 000 jobs sustained by the national beer sector.

To add to the impact, he noted that the investment will also enable SAB to continue transforming the industry by employing black suppliers such as HTP and Isanti glass.

Considering the economic impact of the Covid-19 lockdowns, Rivett-Carnac said that SAB’s intention is to assist with economic recovery.

“The Budget delivered by the Minister of Finance in February ensured that economic recovery was prioritised by keeping the beer excise adjustment closer to inflation. This has provided us with the financial space to grow the beer category responsibly and aid our government in our collective mission towards economic recovery and growth,” he added.

This new investment pledge follows SAB’s commitment to invest R2 billion into capital expenditure projects during its 2021 financial year.

Read:
SAB calls for tax relief in Godongwana’s budget
South African Breweries turns investment taps back on for home market

The group said that the previous investment was channelled into several upgrades at its operating facilities and into “exciting product innovations”.

According to Rivett-Carnac, the beer industry continues to be a key contributor to the South African economy. He cites a recently published Oxford Economics Research paper (2021) which reveals the South African beer industry contributed approximately R74 billion to South Africa’s GDP in 2019.

“This was equivalent to 1.3% of national GDP. The sector sustained over 248 000 jobs in 2019, equivalent to 1.5% of national employment. The tax impact was approximately R45 billion in 2019, this was the equivalent of 3.3% of government revenue.”

“As one of the country’s largest businesses, SAB plays a significant role in igniting economic growth and recovery,” said Rivett-Carnac.

“Our position as an economic-driving, multinational corporation in South Africa means we are keen to play a role in working with our government and social partners to help South Africa recover and grow.”

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