Brewers in a froth
South African regulations prevent a brewer such as SAB from retailing beer and from supplying unlicensed outlets. Still, shebeens – unlicensed taverns – represent a significant part of the market, as sales through the estimated 120,000 of them account for 40 percent of all beer consumed in South Africa.
The country‘s 1500-odd independent distributors evolved originally to get around apartheid-era prohibitions on selling beer to black people. They are now the route to market for unlicensed shebeens.
At the hearing, independent distributors complained that SAB unfairly took business away from them as soon as (illegal) shebeens got a temporary licence.
In the early years of this decade, temporary licences were issued to shebeens to bring them into the formal fold. These licences gave SAB free rein to supply directly customers who had previously bought stock from independent distributors.
The case variously accuses SAB of dividing up territories with distributors in a way that stifled competition, of giving discounts to appointed distributors to the detriment of independent operators, and of fixing prices with distributors.
However, SAB’s legal counsel reportedly said that according to SAB’s market research the move to increase direct sales to newly licensed taverns reduced SAB volumes to independent distributors by just 1.7 percent between 2002 and 2010.
The case has dragged on for quite a while, which may be an indication of its wider political implications.
After the first day of the hearing, the tribunal apparently asked SAB to quietly settle out of court which would have allowed the authorities and the independent distributors to keep face.
However, as this sort of arm-twisting would never work on SAB, the tribunal, the following day, flatly denied ever having made such a suggestion.
Moreover, on 16 August 2010, SAB’s Managing Director Norman Adami reiterated his belief that the brewer had a strong defence in this anti-competition case.
“I think we will be fully vindicated,” he said.
