South African Breweries lost almost 25% of its revenue to second alcohol ban

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South African Breweries has lost 25% of its revenue in the third quarter due to the ban on the sale of alcohol.
South African Breweries has lost 25% of its revenue in the third quarter due to the ban on the sale of alcohol.
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South Africa’s second ban on the sale of alcohol cost South African Breweries almost 25% of its revenue and volumes, year-on-year, for the third quarter of 2020. 

The AB InBev subsidiary has been hard hit by the impact of the ban, which began with the Covid-19 Level 5 lockdown in March and was briefly lifted from June until the middle of July before it was imposed once again. In August SAB cancelled R2.5 billion in investments it had planned for the year, saying that it had lost 30% of its annual production of alcoholic beverages in the 12 weeks of the ban.

The SA government instituted the temporary ban on the sale of alcohol for health reasons to lessen the burden on SA's healthcare system.   

In its third quarter and nine-month results for 2020, released on Thursday, AB InBev said despite the tough period, demand and volume growth picked up after the government lifted the ban.

"We observed robust consumer demand once the government lifted the ban with volume growth resuming in September. Revenue per hL (hectolitre) was flattish as revenue management initiatives were largely offset by mix impacts, as consumers shifted to more affordable brands and bulk returnable packages," said the liquor maker.

SAB produces beers and flavoured brands, and its top peformers in the third quarter were Castle Lager, Carling Black Label, Brutal Fruit and Flying fish, a result of consumers moving to affordable brands. South Africa is one part of AB InBev’s business, which has operations in the Americas, Europe, the Middle East and Africa.

The company reported that its revenue increased by 4% in the third quarter of 2020 due to a growth in volumes and revenue growth per hectolitre of 2.3%. However, its revenue for the past nine months declined by 6.8%.

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