South Africa urged to end ‘devastating’ alcohol ban

11th August, 2020 by Melita Kiely

Trade association Spirits Europe is urging the South African government to advise when it will lift the complete ban on alcohol sales in response to the Covid-19 pandemic, which is having a “devastating” impact on distillers.

South-Africa

South Africa has banned all alcohol sales in response to the Covid-19 pandemic

Spirits Europe noted the alcohol beverage industry is one of the country’s biggest employers, providing more than one million direct and indirect jobs.

South Africa introduced a ban on all alcohol sales on 27 March in response to the pandemic, which was revoked on 1 June. However, without any warning the ban was reinstated on 12 July. It is the only country that has re-introduced a complete prohibition on alcohol sales.

Spirits Europe warned the move has resulted in a spike in illicit consumption and trade, combined with ‘high-risk behaviour’ and rising crime rates.

During the first ban, there were 476 reports of liquor store robberies, Spirits Europe said. Furthermore, the trade body said it could take years and ‘considerable’ financial resources to lower the illicit alcohol trend and bring consumers back to the legal trade.

Farmers who produce grains and grapes to make wine and spirits have also been hit by the ban, along with distributors and sector workers. The initial ban resulted in a R13.9bn (US$793.1 million) loss in taxes.

If the current ban lasts for another nine weeks, it is forecast the potential loss in taxes could be as much as R23.8bn (US$1.4bn) – equivalent to 1.9% of tax income, excluding excise tax.

The total loss in excise taxes during the first ban was R4bn (US$228.2bn). If the existing ban also lasts for nine weeks, it is thought the potential loss could be R7.2bn (US$410.8m) – a 17.6% drop in excise tax income.

Europe exported €255m (US$300.9m) worth of spirits to South Africa in 2019.

Ulrich Adam, director general of Spirits Europe, said: “The ban rips away all the benefits from the Economic Partnership Agreement [EPA] between the EU and South Africa at a time when we should actually find ways to deepen our trading relations to support each other’s recovery processes.

“Banning sales also means banning imports of European spirits, while South Africa continues to export, particularly wine, which has [a] 110-million-litre quota duty free export into [the] EU under the EPA – contributing to R5.7 billion in net exports earnings for SA on alcohol.

“Our member companies operating in South Africa are deeply concerned about the uncertainty of current trading conditions. The lack of clarity on whether and when the ban might be lifted makes business planning impossible. We therefore need a clear and reliable timetable.”

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