Five industry associations in the alcohol industry are calling on government to release the scientific data it uses to justify the repeated bans on the sale of alcohol.
They also request that legal liquor trade be allowed to resume from July 26.
The South African Liquor Brandowners Association (Salba), the Beer Association of South Africa (Basa), Vinpro, the National Liquor Traders (NLT), the Liquor Traders Association of South Africa (LTASA) and the Consumer Goods Association of South Africa (CGCSA) are urging government to work alongside business to define a clear and detailed path to economic recovery, including lifting the latest, month-long, nationwide ban on the sale of alcohol.
The industry is counting the cost of four successive bans in response to the Covid-19 pandemic, as well as the devastation wrought by last week’s looting in KwaZulu-Natal and Gauteng that left more than 200 alcohol retailers and outlets plundered, damaged and burnt.
More than R500-million of looted liquor stock is now in the public domain and is being sold in the illicit market, the organisations point out.
Even before the cost of the looting to the alcohol industry is factored in, the four alcohol bans have already cost the country’s gross domestic product (GDP) an estimated R64.8-billion, or 1.3%, of GDP.
The uncertainty is exacerbated by the lack of transparency around what scientific basis the National Coronavirus Command Council uses to justify repeated alcohol bans to curb Covid-19 under the Disaster Management Act, says Salba chairperson Sibani Mngadi.
“It is incredibly difficult for businesses to plan production, distribution and future investment under the current circumstances, with little or no clear direction from government on what metrics it uses to decide to implement, reassess or lift a ban.
"We are at the mercy of decision-makers who are able to make decisions that affect hundreds of thousands of jobs with little oversight or recourse under the auspices of the Disaster Management Act,” he says.
“It is all happening while illicit trade continues to thrive, and government remains unable to effectively counter the growth of this criminal element.”
The industry questions whether the ban on liquor sales has reduced the number of trauma admissions and it argues that it is the restrictions on mobility under lockdowns and curfews that free up hospital beds, rather than the ban on alcohol sales.
The four alcohol bans resulted in a total loss in retail sales revenue of R45.1-billion, equivalent to 15.8% of the sector’s projected sales for 2020 and 2021.
Excluding the impact of last week’s looting, 248 759 jobs were already at risk across the industry, about 1.59% of the national total of formal and informal employment for 2020.
The combined impact of the alcohol bans, together with the recent looting, has caused irreparable reputational damage to South Africa from an investor confidence and international tourism perspective.
“Many of our members are understandably concerned as there is little to no relief from government in sight to help get their businesses back up and running.
"The continued ban on the sale of alcohol exacerbates the precarious economic position of thousands of businesses - many of them small and black-owned - with no scientific basis for containing the spread of the Covid-19,” says NLT council spokesperson Lucky Ntimane.
“The four liquor bans and the recent looting and destruction of liquor stores have left the independently owned liquor store channel in financial ruins. It is devastating and its heart-breaking.
"If the government does not lift the liquor ban on July 26, many of our members will lose their businesses and never reopen,” LTASA chairperson Sean Robinson adds.
“Not only has the recent looting and arson of liquor outlets and distributors in parts of KwaZulu-Natal and Gauteng put further strain on our industry, it has also served to boost the illicit market with stolen alcohol freely available in these communities.
"This makes the current ban even more nonsensical. It is critical that legal businesses be allowed to trade at a time of such profound economic distress for the country,” says Basa CEO Patricia Pillay.
Vinpro also warns that wine and tourism businesses are on the brink of collapse, with thousands of employees struggling to survive.
“In desperation, we were driven to challenge the national alcohol ban in court on an urgent basis to request provincial deviations to enable off and on-site consumption sale of liquor,” says Vinpro MD Rico Basson.
The liquor value chain needs to be opened to allow for recovery and to prevent the loss of jobs following the unrest and liquor trade restrictions under the Disaster Management Regulations, the CGCSA says.
CGCSA retail members have been at the forefront of providing food relief and security to the areas affected by the recent unrest, however, the restriction on alcohol sales makes it financially onerous to continue with the relief efforts as the liquor side of their respective businesses heavily subsidises the grocery business.
“The restrictions on the sale of liquor products places a significant financial burden on independent small, medium-sized and microenterprise traders, with a material number [of these being] black-owned,” says the CGCSA.
Mngadi says government needs to take practical steps to support business and the economy.
“It is time to put the economy into recovery mode and for government to work with the alcohol industry and help SA get back to business,” he says.
The four alcohol bans also contributed to lost tax revenue, excluding excise duties, of R34.2-billion. It is estimated that a further R10.2-billion in excise revenue has been lost, pushing the country further into the red.
The potential total capital formation lost as a result of the latest four-week ban alone is estimated to be R20.4-billion, equivalent to 0.2% of national capital formation for 2020, the organisations point out.