SAB may be forced to destroy 400 million bottles of beer

Business Insider SA
Beer bottles for home-brewed beer.
Beer bottles for home-brewed beer. (Getty)
  • SAB is stuck with 130 million litres of beer that it can't bottle.
  • Its breweries are already at the legal limit of the amount of alcohol they are allowed to keep on premises. 
  • It wants government to grant it permission to move bottled beer to its depots - otherwise it may have to destroy the product.
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SA Breweries (SAB) – owner of Castle Lager, Hansa, and Black Label – says it may be forced to destroy more than 130 million litres of beer if it is not allowed to transport the brew to its depots.

The transport of alcohol – apart from alcohol for export – is currently illegal under South Africa’s lockdown regulations. All sale of alcohol is also prohibited.

SAB has not been brewing since March 23rd, nor has it or transported beer since the start of the hard Covid-19 lockdown on March 27th.

But as part of “the orderly wind down” of its business during lockdown, a small group of staff have been fermenting and bottling alcohol. SAB is not legally allowed to store brewed beer at its brewery facilities above a certain capacity, which it has now reached.

Currently, SAB has around 132 million litres of beer – roughly the equivalent of 400 million bottles of beer – sitting in its tanks, which it can’t bottle due to the restrictions on alcohol capacity at its breweries.

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In a presentation to government, SAB said that if it is not allowed to transport beer within the next day or so, it will be forced to discard this inventory, at a loss of an estimated R150 million.   

“As the movement of alcohol is not permissible – the beer would in this unique instance need to be destroyed,” the company said. Netwerk24 reports that SA Breweries sent a proposal to the department of trade and industry on Tuesday, asking that it be allowed to transport packaged beer from its breweries to its storage depots. 

“Urgent action is needed to avoid material financial losses to both the government and SAB, as well as significant job losses,” the company said in the document.

If SAB has to destroy the 132 million litres of beer, the company would be forced to operate at about 50% capacity for four months. No bottling or distribution could take place, given that the beer is discarded. “This would mean the loss of about 2,000 jobs – half of SAB’s frontline workforce.”

It would also mean an immediate loss to the government in excise tax of around R500 million.

See also: Cigarette and booze makers are getting a R6 billion tax holiday to make up for lockdown

“This would literally be pouring that tax revenue down the drain, at a time when government – and the citizens of South Africa – have an urgent need for those funds.”       

SAB warned that the longer-term lost tax revenue would be even greater, as it won’t be able to reach full capacity for at least four months – which could mean a loss of up to R2 billion in excise tax.       

Disposing the beer would also be a massive challenge, SAB says, which could take at least 20 weeks. It warned that it could cause serious environmental risk.

If granted permission to move the beer, SAB said that it will work with the police to secure the alcohol.

Last month, a truck transporting alcohol for export was hijacked in Cape Town and many bottle stores have been looted over recent weeks during lockdown.

This article has been updated to correct that the sale – not the consumption of alcohol, as previously reported – is currently illegal in South Africa. Business Insider South Africa regrets the error.

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