Big hangover for taverns

2009-12-05 11:42


THE festive lights are being turned on across the country, but

township liquor traders are not seeing the bright side.

Their expectations have been dampened by low demand as a result of

higher unemployment, lower spending power and crime.

Having witnessed one of the most depressed sales periods over the

course of the year, even the festive season is unlikely to turn the traders’

fortunes around.

President of the SA Leisure Tourism and Hospitality Association

(Saltha), Churchill Mrasi, said liquor sales among their members dropped by up

to 35% this year.

He said: “The worst hit were the taveners whose licences make it

possible for them to buy their stock on credit.”

He said taverners got into trouble by stocking up according to

previous sales levels. When sales dried up, they struggled to meet their debt

­repayments. As a result, many taverners have had to shut down.

“Many of our taverners lack ­financial literacy and giving them

credit during the recession has ­produced detrimental results for some of the

businesses,” he said.

He said shebeens, which are not permitted to buy goods on credit,

displayed a better performance. He expects Saltha members to stock less for the festive


“Our members are living from hand to mouth and cash won’t be

available for them to purchase more stock.”

Mrasi blames job losses for eroding consumer spending.

“Business has been bad for many entrepreneurs because many

consumers were retrenched and they struggle to afford bare necessities.

“And if the

patrons don’t have money to satisfy their needs, they are going to be more

cautious when spending on anything related to leisure, which includes liquor,”

he says.

Mrasi believes it

will take a while before the demand increases and the business returns to


Mrasi’s counterpart at the SA Liquor Traders Association (Salta),

Saint Madlala, had similar views.

“Many economists say the recession ended in September, but our

businesses are yet to feel the ripple effect of the upturn,” said Madlala.

He did not believe the festive season would see increased demand

for drinks. “It has not been a good year in terms of profits. Based on the

information from our members, the downturn resulted in their profits dropping by

an average of 10%.”

“But we are banking on next year’s soccer World Cup as we expect it

to result in an increased traffic of consumers to our outlets.”

Madlala says crime made things worse. “Many of our members have

been hit by robberies and burglaries and that has impacted on the ­turnover and

profitability of our businesses.”

“For instance, some people are staying away from the nightclubs and

shebeens as they don’t want to be victims of crime.”

Madlala said the amount of products they purchased would be driven

by the market.

“Traders will be guided by the demand. Those products which enjoy a

large support will occupy more space on our shelves,” he said.

“We are not really sure which products are going to be popular.

We’ll only know when our market votes with its throat.”

He said the government was supposed to create laws that promote

entrepreneurship and should move away from coming up with punitive measures that

discouraged people from being liquor traders.

He said: “There are many cases where the police have confiscated

liquor and assaulted innocent ­patrons in the process of enforcing


This resulted in patrons staying away from shebeens for fear of

getting manhandled by the police.

The business has also seen an increase in competition with the

number of licensed shebeens increasing from 40 000 to 120?000 since 2004. But

the downturn has slowed the rate of increase.

Mrasi said Saltha would focus on securing licences for

entrepreneurs who have been trading illegally.

“We also want to deal with the traders who sell liquor to minors,”

he said.

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