
25 Jul 2021 Distell’s ire at state’s treatment of alcohol industry
Distell says the recent looting lifted the availability of liquor on the black market, while licensed small businesses were robbed of making future sales.
SA’s largest alcohol producer, Distell, used its financial trading update to criticise the government’s alcohol bans, saying it had repeatedly warned that prohibition encouraged theft. It estimated that 332 of its customers’ facilities had been looted in the recent unrest.
The customers, ransacked during the wide-scale violence that gripped KwaZulu-Natal, included taverns, smaller distributors and bottle stores.
The damage to its warehouse in New Germany that was looted was estimated at R100m and an insurance claim was being lodged.
The owner of well-known brands such as 4th Street wines, Savanna and Klipdrift Brandy, said research conducted by the liquor industry and provided to the government had shown that bans strengthened crime syndicates, and that it had been proven correct.
“The recent unrest demonstrates the unfortunate effect syndicates have in an environment where poverty and unemployment have been exacerbated from the pandemic.”
Distell said that “the fourth ban on alcohol sales was announced with no warning, no consultation with the industry, and poor empirical justification”.
It said the looting increased the availability of liquor on the black market, while licensed small and medium businesses were robbed of making future sales.
Its trading update for the year to end-June showed a resilient performance despite the bans. It attributed the increased profits to growing market share locally, product innovation, robust international trade and continued growth in parts of Africa.
Its revenue was up 5.8% compared with the June year end in 2019, a period the producer feels is more comparable and excludes the pandemic and lockdown sales bans. Volumes were down 3.5% and permitted trading days were down 20%.
Its revenue was up 28.5% compared with the year ending in 2020, which included the hard lockdown and first two-month alcohol ban.
Headline earnings per share (HEPS), a widely used measure of profit in SA, will increase between 212.6% to 232.6%.
Its revenue and volumes in some African countriesexcluding Botswana, Lesotho, Namibia, and Eswatini were expected to rise by between 22.4% and 38.6% respectively, compared with the prior period.
In a line uncharacteristic of financial trading updates, it thanked the SA National Taxi Association (Santaco) for protecting its business during the unrest.
But it pointed out the bans had robbed the government of tax money needed to fight the poverty that had fuelled the looting.
The alcohol industry supports vital sectors of the economy including agriculture, tourism, hospitality, manufacturing, hundreds of thousands of small and medium businesses and a million jobs, it said.
“Cumulatively, these sectors would normally contribute approximately R1,3bn in taxes per week — every rand of which is lost while the ban is in effect.
“Distell itself contributes 60c of every R1 it generates to the government in collective taxes. These taxes — and related employment — are vital to the country’s recovery, not only from the pandemic but also the recent unrest,” it said.
“Recovery, and the role our industry must play, is now critical.”
Source: BusinessLive.co.za