Alcohol industry estimates R36bn revenue losses, says 200 000 jobs at risk due to liquor bans

South Africa’s formal and informal drinking establishments were banned from selling alcohol for 19 weeks.

South Africa’s alcohol industry is estimated to have lost R36.3 billion in retail sales revenues in the on again off liquor bans between 2020, when the lockdown began, and when the latest one ended this month, according to a report. 

It is also estimated that the loss of sales has put more than 200 000 jobs at risk across the formal and informal sectors. 

The bans, which began with the hard lockdown last year, have been a source of contention for consumers, producers and traders. Government has justified its decision to halt alcohol sales as a means to prevent an influx of trauma cases at hospitals and to have beds available for Covid-19 patients.

Dry throats were a big issue for consumers, while the industry lamented revenue and job losses. In an alcohol industry commissioned report, seen by Fin24, advisory firm FTI Consulting calculated the cost of the 19 weeks of the bans. The impact of this, together with an additional five-week export prohibition, is estimated to have cost the industry about 30% of sales opportunities and 1.1 billion litres in sales volumes in 2020 and 2021 thus far.

The overall alcohol sales volumes declined by almost 17%, compared to 2019. The beer sector was the hardest hit, with its sales declining by 195 million litres, ready-to-drink beverage sales dropping by 38.1 million litres, wine sales by 27.2 million litres and spirit sales 10 million litres.

FTI said the performance was also driven by consumers moving to more affordable alcohol brands as their incomes declined. The biggest impact on the beer and ready-to-drink sectors came from curfews and on premises restrictions. Consumers rushing to stockpile on beverages with a longer shelf life like spirits and wines, and post-ban stockouts, also played a role.

The industry employs 415 000 people, and the report estimates that 200 200 jobs could be lost in both the formal and informal sectors.

The state will also be one of the bans biggest losers, with an estimated R29.3 billion tax revenue loss (excluding excise) and a R8.7 billion direct excise revenue loss.

Source Article

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