The beer industry hopes it will take another two years to recover from the economic hangover of the Covid-19 pandemic, which did immense damage in terms of sales, jobs and growth, Beer Association of South Africa CEO Patricia Pillay said yesterday.
Speaking yesterday in Cape Town at the launch of a South African Breweries commissioned study done by Oxford Economics on the impact of the beer sector on the economy, she said the pandemic had cost South Africa 30 percent of the craft beer sector, a key malt producer was forced to close, many restaurants and other outlets had closed, and she said she even knew of people who had taken their lives because of the financial strain that the pandemic had put them under.
She said the government could not keep shutting doors on industries every time there was a crisis - South Africa was one of very few countries that banned the sale of liquor through Covid lockdowns.
She said the sector needed to be consulted on decisions that affected it, as the study showed that beer brewing, all the way downstream to its contribution to agriculture, was a major contributor to communities in the country.
She said the sector wanted to be part of the solutions to problems in the country and that even the banks would not provide it loans because making beer was viewed as “a sin.”
She said the sector needed political certainty over issues affecting it, such as more clearly defining the extent of customs and excise duty increases over a longer term, and the equal treatment of customs and excise duties on alcohol content on different liquor products. This would enable the sector to plan further investments with confidence, she said.
The study showed that beer made a value-added contribution to gross domestic product (GDP) of R71 billion in 2019, or 1.3 percent of GDP and that 249 000, or about one job in 66, were supported by the industry in one form or another. The sector also contributed some R43bn in taxes to the government in 2019.
Dr Azar Jammine, the chief economist of Econometrix, said the raising of excise duties on a sector like the beer industry could only have a very negligible impact on one of the government’s biggest financial problems at present, to address social and economic inequality.
He said the ANC hoped to solve this with a Basic Income Grant, but this would cost between R400-R500bn per year to provide 40 million people with R1000 per month.
He said a basic income grant was unaffordable, as raising VAT could only generate about R60bn a year extra, while a wealth tax might only generate an additional R20-R30bn for the government.
He said the only way to reduce unemployment and grow the tax base was to implement structural reforms, which he said the government was very slow in addressing.
Richard Rivett-Carnac, the CEO of South African Breweries, said the study was important, because when the government imposed the ban on liquor sales through the pandemic, the beer sector did not have a study that showed how important it was to the broader community.
He said, however, there had also been a great deal more engagement with the government post the lockdowns.
edward.west@inl.co.za
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