Distell pleased with alcohol sales being allowed, but raises concerns too

JSE-listed alcohol beverages group Distell on Monday welcomed President Cyril Ramaphosa’s announcement that the sale of alcohol for home consumption will be allowed as part of the country’s move to Level 3 of the Covid-19 lockdown.

It noted that the sale of alcohol would be under strict conditions, such as restricted trading hours and days. However, it also warned of possible chaos.

“The president confirmed that these conditions had not been finalised and would be done so following further discussions with the sector. Distell is a part of the South African Liquor Brand Owners Association (Salba) and is working alongside other industry participants such as the Beer Association of South Africa (Basa) and VinPro,” it said in a statement.

“The industry associations have been engaging with government to develop practical trading proposals that will support government’s Covid-19 objectives,” it added.

Commenting on Ramaphosa’s announcement, Distell CEO Richard Rushton said: “We welcome the move by government to allow the alcohol industry to return to responsible trading. The alcohol industry currently contributes to nearly a million jobs [in its] value chain and supports nearly 800 small and medium enterprises. We are working with government and providing input on the draft proposals.”

Distell also raised concerns about what it terms “the unintended consequences of restricted trading”, such as overcrowding and the continued illicit trade of alcohol. The group also called for the inclusion of taverns to be allowed to sell alcohol.

“In India, where after a six-week ban on the sales of alcohol, similar decisions were taken to open up with restricted trading which lead to over-crowding and fighting at outlets. This outcome would be counterproductive to strict safety protocols and government’s overall Covid-19 objectives,” Distell said.

“Illicit trade has also seen a dramatic rise since the ban, which may continue should trading be banned over the weekends when customers typically consume alcohol. Industry associations have presented several proposals and solutions to ensure safe off consumption trading of taverns,” it noted.

“These solutions include safety protocols for trading, including e-commerce, and also addressed transmission risks across the value chain and the safety of the workforce, suppliers, retailers and consumers. One of the solutions include a ‘click and collect’ model which has been developed with taverns to ensure social distancing measures are followed, in the same way that traditional restaurants will be allowed to operate,” it said.

Distell said taverner associations have committed to ensuring adherence to health and safety regulations, as well as social distancing at all times.

“This forms a part of industry’s educational and training initiatives aimed primarily at the 34 500 tavern owners to ensure they provide a safe environment for customers in which to trade. Part of the support for taverns includes supplying the free personal protective equipment packages, including sanitisers, masks, gloves, as well as education and training material to meet strict Covid-19 safety protocols,” it pointed out.

“Distell is committed to contributing to a safe operating environment as the government opens up the economy. We also appreciate the uncharted territory we all find ourselves in and the steps taken to date to combat the rise of Covid-19,” said Rushton.

“We can learn from other countries in opening up our industry and have proposed pragmatic and safe solutions to avoid these risks. We also see these 34 500 tavern owners as an important part of economic inclusion in both protecting lives and livelihoods,” he added.

Rushton said the industry was confident it can address the challenges around Covid-19 together with government.

Read: Distell warns of up to 80% drop in full-year profits

Distell’s share price was up almost 6% on Monday, at R78.58, following Ramaphosa’s announcement. AB Inbev, the owner of South African Breweries was up by just over 2%.