[ad_1]
A ban on alcohol sales is forcing thirsty South Africans to be creative, from experimenting with homemade beers to crossing the border in search of a drink.
That worries bottlers, including wine and spirits maker Distell Group, SA’s largest wine exporter.
The ban, one of the strictest in the world, was introduced on March 27 under a national blockade to control the spread of the coronavirus. While many consumers stocked up, some showing their generosity in circulating drinking challenges on social media, the extension of the shutdown earlier this month has led some consumers to try homebrewing as their outlets run out. supplies.
Others have taken more extreme measures to sneak across closed borders to neighboring countries in search of beer.
It also led to more direct criminal activity, with Police Minister Bheki Cele condemning the robbery and looting of more than a dozen liquor stores.
And law enforcement officers have also intercepted trucks carrying alcohol, including vehicles owned by Anheuser-Busch InBev SA, which found deposits with products worth millions of rand. The company said it had permission to transport part of its inventory.
What causes Distell’s anxiety is that, in addition to the sales moratorium, shipments abroad have been banned, limiting exports to key markets such as Europe, the United States, and China. South Africa’s ranking as the world’s ninth-largest wine exporter is in jeopardy, CEO Richard Rushton said.
“We have nearly 500 million rand worth of open orders for export across all of our categories, waiting for foreign customers in markets without a liquor ban,” Rushton said in an email response to questions.
Silver lining
Distell, which competes with Pernod Ricard SA and Diageo, exports around R3 billion in wines, spirits and cider per year. It is losing R8.2 million each day that the ban remains in effect. According to industry estimates, SA has forgone R200 million a week in wine export earnings during the shutdown.
“When the products are not on the shelves, consumers will try to replace them and in some cases it will be a more permanent lost sale,” said Syd Vianello, an independent retail analyst in Johannesburg. “After the export ban is lifted, it can also be difficult to reclaim shelf space.”
One of the unintended consequences of the ban is that the government is earning less tax revenue at a time when it needs funds to revive an economy hampered by the blockade. Almost 60% of the cash that Distell makes is paid in a combination of excise and corporate taxes to local governments.
Sign up
Grape and apple growers are also struggling: Distell buys more than a third of South Africa’s grapes for wine, brandy and ready-to-drink beverages and half of the country’s apple juice concentrate, used for cider.
And there has been a surge in the illicit alcohol trade, an illegal industry that is likely to continue long after the shutdown ends, according to Distell.
Not everything has been bad. According to Charles Parry, a researcher at the South African Medical Research Council, one of the benefits of the alcohol ban has been that the reduction in alcohol consumption likely led to a quarter, or 9,000, fewer cases of trauma in the hospital rooms every week.
While South Africa will begin easing the blockade in late April, many restrictions will remain, including a ban on the national sale of alcohol. It is still unclear whether liquor exports will be allowed.
Distell is prepared for any eventuality.
“We have prepared plans and protocols for the transition to a safe and responsible production environment to meet demand, along with any changes in national regulations surrounding the sale of our brands,” said Rushton.
