Alcohol ban: SAB halts R5bn investment in SA

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Picture: iStock/Claudiodivizia
Picture: iStock/Claudiodivizia

SA Breweries (SAB) has halted R5 billion in investments in South Africa over the next two years.

The alcohol producer said this was due to the consequences of the alcohol ban.

“The cancelation of this planned expenditure is a direct consequence of having lost 12 full trading weeks, which effectively equates to some 30% of the SAB’s annual production,” SAB’s vice president of finance, Andrew Murray, said.

“This decision is a result of the first, and current, suspension of alcohol sales which has led to significant operating uncertainty for ourselves, our partners, as well as colleagues in the industry, including participants in the entire value chain, and which impacts over one million livelihoods across the country.”

SAB was supposed to invest R2.5 billion this year as part of its annual capital and infrastructure upgrade programme, but this has been cancelled.

A further R2.5 billion earmarked for the next financial year remains under review, SAB said.

“The investments that were being considered included upgrades to operating facilities and systems, as well as the installation of new equipment at selected plants. This decision will also have an impact on the external supply chain companies that had been selected for these upgrades,” SAB said.

Last week, the company said it would be cutting costs and developing a job retention scheme.

It is forecast that the jobs lost across the entire industry as a result of the alcohol ban will soon reach 120 000 people and the tax lost from the first ban is sitting at over R12 billion.

Zoleka Lisa, vice-president of corporate affairs, told City Press that the plan includes a salary reduction for 18 months for all employees. Salary increases have also been frozen.

“The ban is having a devastating impact on the profitability and liquidity of SAB as we are earning zero income while still having to pay our employees and suppliers. Unfortunately, this is not sustainable,” Lisa said last week.

“It is forecast that the jobs lost across the entire industry as a result of the alcohol ban will soon reach 120 000 people and the tax lost from the first ban is sitting at over R12 billion,” SAB said on Monday.

Murray said SAB “will continue our attempts at engaging with the South African government to obtain some form of clarity on when we can resume operations”.


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