In the course of the COVID-19 pandemic, the re-introduced ban on alcohol sales and the collapse of the restaurant and bar trade, Heineken South Africa and South African Breweries (SAB) have dumped their ambitious investment plans for this year.
Heineken reported on Friday to shut down its production in South Africa and to cancel plans for a new brewery in the South African province of KwaZulu-Natal . The production facility was planned to cost ZAR 3 billion (USD 172m) and to create 400 permanent new jobs in Inyaninga, 30 km north of Durban (inside.beer, 9.10.2018). Already earlier, the company announced to cut executive salaries by 20% from May to December and to refrain from paying bonuses this year.
SAB, the South African arm of global brewer AB InBev followed on Monday with an announcement to cancel likewise ZAR 2.5 billion (USD 144m) of planned investments and put another ZAR 2.5 billion under review for the next financial year. The money was intended for upgrades to operating facilities and systems, as well as the installation of new equipment at selected plants. “The cancellation of this planned expenditure is a direct consequence of having lost 12 full trading weeks, which effectively equates to some 30% of SAB’s annual production,” Andrew Murray, Vice President Finance, Africa Zone at AB InBev said.
Both groups hope now for a quick lift of the controversial ban on alcohol which was instated for a second time three weeks ago by Cyril Ramaphosa. The president of South African intends with this measure to free-up hospital beds needed for COVID-19 patients and which are currently occupied by those suffering from alcohol-related traumas (inside.beer, 13.7.2020). “If the government acts now and lifts the ban, we can begin to recover and prevent this catastrophe,” Lucky Ntimane, convener of the National Liquor Traders Council (NLTC) said.
“South Africa remains a priority market for Heineken globally, and we continue to explore growth opportunities that will benefit the business and the local economy,” said Kate Kenny, director at JNPR and Heineken South Africa spokesperson. “However, due to tough micro and macro-environment challenges, and with the additional strain brought on by the Covid-19 lockdown with restrictions on alcohol sales, we have had to reassess a number of our expansion ambitions including exploring the establishment of a brewery in KwaZulu-Natal. The ban is placing immense pressure on our industry to retain jobs, create new ones and contribute to the local economy.”