SA cannot afford another alcohol ban

04 Mar 21

The industry lost over R36bn in revenue and over 200 000 jobs as a result of the three alcohol bans according to research conducted by FTI Consulting’s Economic Research Unit

In addition, together with the rest of the South African alcohol industry, we are gravely concerned with the above inflation increases to excise tax announced this week. An 8% increase in excise tax will further strain the alcohol industry, increasing risks to jobs and businesses in the value chain. The tax adjustments do not take into consideration a significant increase in the size and efficiency of the illicit market that has grown during the sales bans.

Here is what the research data shows about the economy-wide impact (i.e. the impact on the alcohol industry, its immediate suppliers, and the wider economy) of an outright ban on alcohol sales:

How does this affect the average South African?

The three alcohol bans resulted in more than 200 000 jobs losses – or about 1% of national employment as a whole. This is a calamitous outcome for South Africa, which is already straining under a shockingly high unemployment rate.

At SAB, we lost 30% of our annual production in 2020 and, as a result, paused R5 billion in investments – a blow to the country’s much-needed investment drive to kick-start an economy in the doldrums. But the impact doesn’t stop there. During the ban we were unable renew the contracts of 550 workers, but have since re-instated 378 contract post the ban and all of our salaried employees took a cut in pay.

To put it into perspective, with a 125-year-long South African heritage our almost 100% locally-sourced business includes 3 739 suppliers – almost a third of which are SMMEs – who support more than 140 000 jobs. SAB sources agricultural products from more than 1 200 farmers of barley, hops, fruit and maize as well as grape growers, of which 757 are emerging farmers.

Further upstream, the legal alcohol industry accounts for 85% of the glass packaging industry’s sales – a sector which suffered losses of R1.5 billion during the first alcohol ban alone.

While SAB supports all reasonable and responsible measures that curb the spread of the pandemic and save lives, including an earlier curfew to limit movement, reduced indoor and outdoor capacity at gatherings, measured alcohol restrictions by channel and heightened law enforcement, we now know that SA Inc can certainly not afford another outright alcohol ban.

At SAB, our primary aim is to protect our 5 600-strong workforce and the more than 250 000 livelihoods that depend on SAB every day. So now we claw our way back from the damage that the alcohol bans inflicted.