The liquor industry, while pleased that the third sales ban has been lifted, says the sector is still on its knees with small businesses decimated and the future uncertain.
Many industry players expressed concern that restrictions could return, making it almost impossible to make plans regarding the production, marketing and sale of alcohol.
President Cyril Ramaphosa, announced that liquor could be sold daily at restaurants until 10pm and at retail stores and taverns from Monday to Thursday.
The industry faced a six-week ban on liquor sales starting on December 28, after two bans last year totalling 12 weeks.
But the industry has warned that the threat of new bans would damage business sustainability.
Sibani Mngadi, a spokesperson for SA Liquor Brand Owners Association (Salba), a body that represents large liquor producers, said it was a problem that whenever there was a spike in Covid-19 cases, the government’s “default position” was to ban liquor sales.
Citi analyst Kgosietsile Rahube told Bloomberg that intermittent bans were likely to remain a feature in the near term.
Salba also raised concern about lack of consultation. Mngadi said that while the government had consulted religious groups and education unions, it did not consult the liquor industry, which contributes R173bn to GDP.
Tavern owners's representative Lucky Ntimane of the National Liquor Traders Alliance said he hoped it was the last time the tavern sector was subject to “humiliating bans” without consultation and financial assistance from the government.
With no cash flow, but high fixed production and salary costs, the big players in the liquor industry asked to meet the government. When this fell on deaf ears, they asked the Treasury for a tax deferment in early January.
The industry pays tax when it produces liquor, but not when it sells it. As a result, it has to pay tax without any income even if there is a ban.
Mngadi said it did not get a formal response from the National Treasury on the request for excise tax deferment.
Salba encouraged individual companies to approach the SA Revenue Service (Sars) for individual tax delays. Some companies such as Distell were given 60 days deferment by Sars, allowing them to delay paying tax.
In response to the bans, SAB, which is part of the world’s largest brewer AB InBev, has challenged the constitutionality of the ban and the process taken by the national coronavirus command council to regulate sales. It would not say on Tuesday whether it would proceed with the court case.
Vinpro, a body representing 2,500 wine farms and wine producers, has said in its court case that will continue that the regulations on liquor sales during a national state of disaster should be made by provincial rather than national authorities. “We must first ensure that our industry is not again switched on and off nationwide like a light switch by government, regardless of variation in Covid-19 status in the respective provinces,” said MD Rico Basson.
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