The restaurant industry was badly affected by the pandemic, but probably one of the most challenging issues to deal with were the repeated alcohol bans. When the government implemented strict lockdown rules prohibiting the sale of alcohol, they had a profound impact on the restaurant and liquor industry. The alcohol bans also had a damaging effect on the economy and caused extensive job losses.  

According to Businesstech, South Africa’s three alcohol bans resulted in a loss of R52 billion to the economy. This claim was detailed in a report by the alcohol industry, which looked at the impact of the lockdowns on our economy. Kurt Moore, chief executive of the South African Liquor Brandowners Association, said that not only was the industry and its employees suffering as a result of the prohibitions, but the government itself had experienced considerable losses to the fiscus.

  • The assessment shows that the tax revenue loss (excluding excise) to the fiscus from the value chain arising from the bans amounted to R29.3 billion or the equivalent of 2.3% of tax revenue. 
  • The direct excise tax revenue lost across the nation was R8.7 billion, equivalent to 21.2% of excise revenue. 
  • The country’s GDP loss was approximately R51.9 billion, 1% of the total GDP measured at market prices due to the three bans. 
  • Moore said that if one factored in the loss of potential total capital formation, which would come to approximately R21.7 billion, the prohibition measures could be viewed as a national socio-economic disaster. 

Prohibition job losses 

In the same article, Patricia Pillay, chief executive of the Beer Association of South Africa, said that the liquor industry had suffered a considerable financial loss which had affected the lives and livelihoods of thousands of people in the sector’s value chain. 

“The beer industry alone lost approximately R18 billion in sales throughout the three bans,” she added. However, the job losses were potentially more damaging with the equivalent of 1.22% of national jobs in the informal and formal sectors under threat due to the booze bans. 

Pillay suggested that the government should consider different methods to address alcohol misuse in future. “We again ask the government to consider viable alternative measures that address alcohol misuse while maintaining the livelihoods of a significant number of people whose jobs and access to income are dependent on the industry,” she said.

Damage to the wine industry 

The wine industry also came under severe strain. Vinpro managing director Rico Basson said domestic wine sales dropped by 20% (in volume) as a direct result of the alcohol bans. The five-week export ban resulted in 300 million litres of uncontracted wine within 640 million litres of stock at a time when the industry had started the 2021 harvest. This had created a stock dilemma and placed enormous pressure on storage capabilities. Basson also voiced his concerns about  job losses in the industry. 

What can be done?

Even though the alcohol prohibitions have wreaked havoc on th economy, one company is trying to address the damage constructively. Diageo South Africa launched the #WeChoose campaign to assist liquor traders in rebuilding their business. 

Alcohol bans have had a major impact on many businesses and the supply chain, not to mention the millions lost in tax revenue. Many small businesses have had to close, and many people have lost their jobs and sources of income. 

Diageo is an international company with a footprint in South Africa that produces premium alcohol. It’s providing R200 million in stock replenishments, cash and marketing support, and an awareness campaign to promote responsible drinking. This will benefit more than 400 selected on-premise establishments including bars, taverns and restaurants in Johannesburg, Durban and Cape Town. Every outlet will receive stock of up to R6 000.

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Author : Rudi Badenhorst