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19 November 2021

Brewers warn against another alcohol ban in South Africa

South Africa | No jobs, no electricity and no booze? South Africa is facing a joyless festive season. In late October, the energy supplier Eskom laid out its load shedding forecast for the next 18 months. It expects rolling blackouts to feature heavily in South Africa for the foreseeable future.

The ongoing power cuts in South Africa may result in the shedding of at least 350 000 jobs, despite projections of 3.9 percent economic growth for 2021.

The South African economy was wobbling even before covid-19 hit. But the economic destruction caused by the pandemic has pushed the unemployment rate to 44 percent, when using the expanded definition that includes jobless people who have given up looking for a job.

Covid restrictions and prohibition

In early November, the Beer Association of South Africa (BASA) warned that the government could introduce another alcohol ban in South Africa, should a fourth wave of covid infections hit the country over the December holiday period.

The association, which represents the Craft Brewers Association, Heineken South Africa and AB-InBev/SAB, is concerned that another ban over a critical period could further damage the industry and lead to job losses.

The previous four alcohol bans saw the brewing industry losing 161 days of trade since March last year, putting over 240,000 jobs at risk, with a loss of ZAR 34.2 billion (USD 2.3 billion) in tax revenue and a loss of ZAR 10.2 billion (USD 700 million) in excise revenue.

“No government funding or relief has been provided to assist our sector throughout this crisis, which has resulted in many small businesses being forced to close their doors permanently,” BASA said. It added that already 27 craft breweries (out of about 180 before the crisis) have gone out of business.

Making matters worse, South Africa is also facing supply chain issues. Already, glass bottles are in short supply. At the end of October, Distell, the maker of Savannah cider, confirmed a shortage of the alcoholic beverage.

Covid is a grim reaper

South Africa has recorded more than 260 000 “excess” deaths since May 2020. Researchers estimate that 85 percent to 95 percent of these excess deaths were caused by covid.

This is nearly three times as high as the official covid death toll (90 000 to date) published by the Minister of Health. The problem with the official death toll is that it only includes confirmed covid deaths in health facilities.