The bottling and labelling sections of the brewery. The Alrode Brewery. Johannesburg South Africa. 23rd April 2008. Photo: Media Club (Flickr)
The bottling and labelling sections of the brewery. The Alrode Brewery. Johannesburg South Africa. 23rd April 2008. Photo: Media Club (Flickr)
Warning: The news you are about to receive may cause deep, unequivocal grief.
South African Breweries (SAB) have said that they are left with no choice but to dump over 130 million litres of beer that it can’t bottle due to lockdown regulations preventing them from running their supply chain.
For clarity, that’s around 400 million bottles.
The waste of product and suspension of business could cost the company an estimated R150 million, with nearly 2 000 jobs at risk.
Plea to government
SAB have halted their brewing operation over the lockdown period, with the last batch of golden nectar pumped out on 23 March. A small group of staff have continued bottling and processing beer in the meantime though as part of an orderly winding-down in production.
Due to the restrictions, SAB have been unable to move the product through its supply chain
SAB currently has around 132 million litres of beer sitting in its tanks, which it is unable to bottle due to the restrictions on alcohol capacity at its breweries.
In a desperate plea to the Department of Trade and Industry, the company said that urgent action was required to mitigate the damage.
“As the movement of alcohol is not permissible – the beer would in this unique instance need to be destroyed,” the company said.
“Urgent action is needed to avoid material financial losses to both the government and SAB, as well as significant job losses,” they said.
If SAB are forced to destroy the 132 million litres of beer, the company would be forced to operate at about 50% capacity for a period of four months.
“This would mean the loss of about 2 000 jobs – half of SAB’s frontline workforce.”
“This would literally be pouring that tax revenue down the drain, at a time when government – and the citizens of South Africa – have an urgent need for those funds.”
Alcohol ban costing the taxman
The immediate cost to the treasury in terms of excise tax would run into the region of R500 million rand.
On Tuesday 5 May, South African Revenue Service (SARS) Commissioner Edward Kieswetter said that the taxman was missing out on around R1.7 billion in under-reported taxes from the sale of liquor and cigarettes during the lockdown.
