Alcohol industry is shocked by the government’s U-turn

The embattled liquor industry says President Cyril Ramaphosa’s immediate decision to ban that sales of alcohol will lead to a significant amount of job losses in the industry.

According to the South African Liquor Brand owners Association (Salba), chief executive officer Kurt Moore the industry has over a million workers and the ones that will be the hardest hit are smaller retailers, wineries and tavern owners.

It was already estimated that the SA wine industry, which employs around 300 000 people, would lose close to 18 000 jobs and that nearly 80 wineries and 350 wine grape producers would close their businesses in the next year, due to the previous five-week ban on exports and nine-week ban on domestic wine sales. The industry has also suffered direct losses of close of R3 billion during this time.

“The Government’s decision has serious economic consequences, placing hundreds of thousands of livelihoods at risk…the immediate enforcement of the ban will have other unintended consequences which includes further job losses throughout the value chain,” Moore says.

He says that during the nine weeks that alcohol was banned the alcohol industry lost R18 billion in revenue and R3.4 billion in excise tax.

He explains that the excise tax was lost from “the growth in sale of illegal alcohol products which don’t pay taxes”.

Ramaphosa said during his address to the nation on Sunday evening, that the reason for re-introducing the ban was to take the pressure off the health system. The country had seen a surge in infections since the ban was lifted, June,1 and trauma units have seemingly become crowded.

Currently, there are 276 242 positive cases identified, with 134 874 recoveries and 4 079 deaths.

Taken by surprise

Despite the surge in infections, the industry was just as shocked when they heard the President announce the ban on alcohol.

The alcohol industry claims has engaged continuously with the Government and especially the Department of Trade, Industry, and Competition (DTIC) over the past month regarding the efforts put in place to ensure compliance with regulations (limited trading days and hours) as well as adherence to the safety protocols informal retail and taverns.

“Despite these engagements, the industry was given no warning about the ban, nor an opportunity to consult with the National Coronavirus Command Centre (NCCC) before a decision was made and no consideration was given to the immediate logistical difficulties it poses for both suppliers, distributors and retailers alike,” Moore says.

“Despite our shock and dismay at the abrupt decision by Government, we will urgently take up our deliberations with them again with renewed energy,” says Rico Basson, Vinpro managing director.

The South African alcohol industry including the National Liquor Traders Council, South African Liquor Brandowners Association (SALBA), the Beer Association of South Africa (BASA), Vinpro, the Liquor Traders Association of South Africa (LTASA) and manufacturers is “disappointed” with the decision to reinstate prohibition of the sale of alcohol.

“Ramaphosa’s decision to reinstate the nation-wide ban on the sales, dispensing, and distribution of alcohol with immediate effect is deeply troubling. The industry shares with the Government its concerns regarding the increase in Covid-19 infections and will continue to support efforts to curb this unprecedented health emergency,” Moore says.

Closed for sale of booze but open for talking

The industry says it has been committed to prioritising lives and safeguarding livelihoods across the sector during this pandemic while ensuring that we adhere to safety, responsible trading, and the sensible consumption of alcohol.

“We will continue to offer unanimous support in placing its assets at the availability of Government in fighting this pandemic,” Moore says.

The industry- initiated contact with the government on 6 July to “create a social compact that drives behavioural change regarding the use and consumption of alcohol”.

“We are awaiting a response,” Moore says.

Moore says the industry recognises the need to balance the risk to lives with maintaining livelihoods.

“In addition to the economic consequences that threaten livelihoods, the contribution by the industry to the fiscus will be severely compromised, at a time when tax revenue is coming under increased pressure,” Moore says.

Suggested solutions

Moore says while they acknowledge the urgency of the situation, it is crucial to understand the complexity of alcohol-related trauma so that they maybe able to sharpen the focus on the most effective interventions and also measure their impact against a shared understanding of the facts and the problems.

“This requires access to health and alcohol-related information in private and public sector hospitals and clinics which government has never shared with industry,” Moore says.

The industry believes the best approach is to target problematic drinking to manage and achieve long-term, lasting changes.

“The regulation imposed has a significant negative economic impact and could have been designed in a less damaging manner, but with the same alleviation of the impact on the healthcare system,” Moore says.

They call for behavioural change regarding the use and consumption of alcohol though countering unacceptable and irresponsible consumption; intervention programmes and enforcement of policies to address:

• Gender-based violence (GBV) and effect behavioural change;
• firm interventions against drinking/driving and walking with renewed practical support for enforcement in collaboration with the Department of Transport and the RTMC (Road Traffic Management Corporation) and;
• dealing with illicit trade and enforcement. In this way, we can work together to create a social compact that not only works to save lives but also preserve livelihoods.

It could have been worse

Business Unity CEO, SA Cas Coovadia, says he is pleased that the Cabinet agreed not to reintroduce higher levels of lockdown in hot-spot areas.

“That would have been devastating to the economy,” Coovadia says.

“We have to recognize that alcohol abuse, since the relaxation of alcohol sales, has led to a substantial increase in trauma cases, which puts a severe strain on an already pressurised health care sector”.

“However, abuse will continue through alcohol sales in the illicit market, and government must demonstrate resolve and action to deal with the illicit market,” Coovadia says.

Coovadia encourages that there should be a priority in addressing the pandemic expected surge in cases.

“[D]uring the peak and [we] must allocate maximum health capacity to Covid cases, so it is inappropriate to disagree with that. There will undoubtedly be a significant negative impact on the alcohol industry, including loss of jobs as a result of reintroducing a ban on sales. We need to put our heads together to find concrete and demonstrable ways to drastically reduce abuse of alcohol because that is the crux of the problem,” Coovadia says.

The industry is still yet to find out like everyone else when the ban would be lifted- again.