(4 minutes read)
· South African Breweries (SAB) has considerably reduced investments due to the impact of the alcohol ban
· This works out to several billions of rands since the investor confidence is one of the lowest in the recent months due to the pandemic
· Recently, the alcohol producer announced it had cancelled R2.5 billion in capital and infrastructure upgrades for 2020
· The company is in the process of reviewing another R2.5 billion for 2021
South African Breweries (SAB) has considerably reduced investments due to the impact of the alcohol ban. This works out to several billions of rands since the investor confidence is one of the lowest in the recent months due to the pandemic.
Recently, the alcohol producer announced it had cancelled R2.5 billion in capital and infrastructure upgrades for 2020. The company is in the process of reviewing another R2.5 billion for 2021.
The company officials point out that it was a direct consequence of having lost, as of 3 August 2020, 12 full trading weeks, which effectively equates to some 30% of the company’s annual production. Alcohol sales were banned as part of the country’s initial lockdown that started in late March. Although the ban was later relaxed, it was reintroduced in mid-July following a rise in trauma cases.
The company maintained that 120, 000 people in South Africa’s alcohol industry risk losing their jobs due to the ban. The initial ban had caused a loss of about R12 billion to the exchequer. However, the government’s point of view is that the ban is necessary to keep SA’s hospitals free from trauma victims as Covid-19 cases rise. Along with SAB, there are many other alcohol producers who put their plans for upgrades on hold in light of the ban. Beer producer Heinken also deferred plans for a R6 billion expansion in Durban, which otherwise, would have created 400 direct jobs.
