16 Jan 2021 SAB cancels R2.5bn in investments, as ‘huge job losses’ loom
SA Breweries, part of AB InBev, has cancelled a further R2.5-billion of investment earmarked for 2021 following a third local ban on alcohol sales in the country, it reports.
SAB’s cancelled investments in South Africa in relation to the ban now total R5-billion. In August, the maker of Carling Black Label and Castle Lager beer cancelled R2.5-billion of planned expenditure following a second alcohol ban.
South Africa has banned alcohol sales as part of efforts to free up space in hospitals burdened with alcohol-related injuries for Covid-19 patients.
As a result, more than 165 000 people in South Africa have lost their jobs and about 30% of local breweries have been forced to shut their doors permanently.
“Given the material impact that this third ban on the sale of alcohol has on our business and the possibility of further bans, we have no choice but to halt these investments for the foreseeable future,” SAB’s VP of Finance, Richard Rivett-Carnac said in a statement.
He added that allowing off-premises trading with restricted trading days and hours, couple with an earlier curfew, would have been an effective way to support the healthcare system without a total ban on alcohol sales.
“We will continue to knock on all available doors and engage with the government to find a way forward that is focused on saving lives and livelihoods alike,” he said.
The cancelled investments relate to upgrades to operating facilities, product innovation, operating systems as well as the installation of new equipment at selected plants, the brewer said.
“This decision will impact on the profitability of and number of jobs created by the companies that would have worked with SAB to execute the capital investment plans,” it added.
Legal challenge
The cancellation of investment comes after SAB announced plans to challenge the constitutionality of South Africa’s latest alcohol ban in court.
“After much consideration, SAB has decided to approach the courts to challenge the constitutionality of the decision taken and process followed by the National Coronavirus Command Council (NCCC) to re-ban the sale of alcohol,” it said.
“This legal action is the last resort available to SAB in order to protect our employees, suppliers, customers, consumers and all the livelihoods we support.”
The group said that challenging the constitutionality of the ban, which removes the South African public’s right as adults to responsibly consume a beer safely in the privacy of their own homes, is an integral part of its court action.
“The damage to the South African economy and impact on the alcohol value chain arising from ban on the sale of alcohol is, in SAB’s view, disproportional and unlawful.”
Source: MoneyWeb.co.za; SAB, BusinessTech.com