KZN flood-related property damage could cost SA Breweries as much as R700 million

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KwaZulu-Natal was hit by heavy flooding last month.
KwaZulu-Natal was hit by heavy flooding last month.
Claudine Senekal / Ladysmith Herald
  • SAB’s Prospecton brewery is only operating at 30% capacity following floods that recently swept through KwaZulu-Natal.
  • The brewery, which operates on a 24-hour schedule throughout the week, was one of several SA business operations that were impacted.
  • A canal surrounding the plant failed to channel water into the ocean because it was clogged with sand, leading to many millions in damages. 

The floods that swept through KwaZulu-Natal in April this year might leave the country's biggest beer maker, South African Breweries (SAB) with as much as R700 million in damaged property.

On 12 April, production at SAB’s Prospecton brewery in Durban came to a halt. The brewery - which operates on a 24-hour schedule throughout the week - was one of several South African business operations that were impacted by the floods that swept through the province.

SAB’s plant manager Ra'idah Vaid told Fin24 that in just one day, 300mm of rain fell in the Isipingo area where the facility is based. That caused the canal surrounding the plant to fail to channel water into the ocean because it was clogged with sand. Consequently, the water was driven back into the first floor of the three-storey brewery.

READ | KZN floods: Nine passenger railway sections severely damaged

"Eventually [the water] got to armpit [depth] around the entire brewery. There was no part of it that was unaffected," Vaid said.

The first floor is where most of the brewery’s equipment was kept, she said, and to escape the flooding, employees fled to the second and third floors where they were trapped for hours.

Plant staff also battled to get into property, spending four hours clearing their way in from the gate through the slippery layer of mud covering the site.

"It’s been tough for people because they are [going beyond doing] their normal jobs; they are doing things like cleaning equipment, instead of [operating] or fixing equipment," she said. 

SAB’s Prospecton plant churns out 400 million litres of product a year across SAB’s brands, such as Castle Lager, Hansa Pilsner, Carling Black Label and Lion Lager. The plant is the brewer's third-largest of its operations locally and in the rest of Africa.   

Following the flood, the facility didn’t produce any beer for three weeks and - just a week ago - managed to get a mere 30% of its production up and running again.

READ | Sasol declares force majeure on certain chemical exports due to KZN flood damage

Vaid said the "extensive damage" the brewery suffered is likely to cost up to R700 million to repair. In addition, the group has suffered losses of R100 million just in terms of stock and inventory.

As a result, SAB has pushed back the brewery’s planned R650-million expansion by a month to July. The plant is also behind its annual beer production volumes, which Vaid said could increase in the six weeks it will take the to get the brewery fully operational.

As for possible shortages in the province, Vaid was quick to allay concerns. "There’s no need to worry about no stock … the other breweries are sending us beer. So, the KZN consumers will still have beer … on the [store] shelves," she said. 

The floods have resulted in SAB having to prioritise flood mitigation. 

"We’ve never seen a flood like this before … we need to add floods to our evacuation procedures [and] our business continuity plans. It’s a different risk that [we] hadn’t identified previously," Vaid said.

READ | Solidarity Fund vows to protect flood relief with 'same transparency' as Covid-19 funds

The company is reaching out to the eThekwini Metropolitan Municipality to ensure that the maintenance of the canal be done regularly. In addition, SAB is consulting with a flood engineer, and it will move some of its operations to higher levels of the building.

It will also look at how it can save expensive equipment, as well as equipment that takes the longest to get up and running again - such as its electrical infrastructure and servers - should another flood strike.

The 127-year-old beer maker opened the Prospecton plant 48 years ago with future expansion in mind. Since then, the facility has grown so much that it’s "financially prohibitive" to move, so SAB will adapt, Vaid said.

 


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