Heineken SA, owner of beer brands Amstel and Windhoek, has become the first major company to cut jobs as a result of SA’s third alcohol sales ban, which has stopped trade since late December.
Europe’s biggest brewer, which is among SA’s main investors, said it plans to reduce its domestic workforce by about 7%, or 70 positions out of 1,000.
The decision comes just days after SAB, a unit of the world’s largest brewer, AB InBev, said it had cancelled R2.5bn in planned investment.
Glass manufacturer Consol, which has the alcohol industry as one of its biggest clients, said this week it is doing everything it can to avoid retrenching workers as it spends R8m every day on production despite a collapse in demand.
The sale of liquor has been prohibited for a cumulative 15 weeks in three separate bans since the outbreak of Covid-19, with the government arguing that the step is necessary to reduce the number of trauma patients at hospitals.
Both Heineken and AB InBev are multinational companies that appear to be losing patience with SA’s restrictions.
Heineken’s human resources director, Yvonne Mosadi, said the decision to proceed with retrenchments “was certainly not an easy one to make” and the company had looked at other ways to cut costs in the face of a pandemic and restrictions that have been “devastating”.
Heineken said in 2020 that it would not cut its SA staff as a result of the coronavirus pandemic as it looked at other ways to cut costs, but pressure after the third ban has made redundancies unavoidable.
“Unfortunately, given the ongoing challenging situation the company finds itself in, these measures are no longer adequate to manage and sustain the operating costs of the business,” said Mosadi.
Companies across the value chain said that with no guidance on when the ban will end, it’s difficult to make plans to mitigate its effect. Companies incur costs even as sales are halted because the production of beer, wine and even glass cannot easily be stopped.
Heineken said its European owner had instituted a global review of the business and concluded that due to market pressure in SA it needed to restructure local operations. This is in order “to build a high-performing business fit for the future given the significant impact the Covid-19 pandemic has had on our business in the past year”, it said in a statement.
Heineken stopped development of a brewery in 2020 as a result of the second alcohol sales ban, which began in mid-July.
The National Liquor Traders Council, which represents tavern owners, warns that the ban is fuelling illicit sales and said its members felt pressured to break the law to survive.
Previous prohibitions on alcohol and tobacco sales were blamed for a boost in illegal trading, with experts saying the criminal infrastructure will be maintained even after the bans are lifted.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.