EXCLUSIVE: Lockdown blow to craft beer industry

Walts Malting, South Africa’s only malting company to offer specialty malts to beer brewers are closing their doors for good.

The world's second largest brewer, Heineken, is scaling down operations in South Africa due to the impact of covid-19 and government's ban on the sale of alcohol.

South Africa’s only malting company to offer a variety of specialty malts to beer brewers has been forced to close its doors forever. This is due to the fastening grip of the covid-19 lockdown on the economy and government’s decision to prohibit the sale of alcohol.

In an exclusive interview with Food For Mzansi, Patrick Nelissen, senior manager at Walts Malting, said that on 12 May (Tuesday) it had informed its customers of their decision to close shop.

This leaves all 17 of the company’s employees jobless as of the end of May and will have a huge impact on the financial viability of Mzansi’s craft beer industry. It means that craft breweries will now have to import specialty malts at a punitive exchange rate.

The Craft Beer Association of South Africa (CBASA) has indicated that half their members are already in serious danger of closing by the end of May. More than 60% of the craft breweries that belong to the CBASA have already had to retrench staff.

Alcohol sales ban fatal for small businesses

The malt manufacturer based in Cape Town has been battling under the ban on alcohol sales. “We have reached a point that we have no other option than to close the business,” the company wrote in a letter to more than 70 breweries in the Western Cape and Gauteng.

Nelissen says they do not believe that they will be able to achieve the minimum volumes required to continue operations.

“Pressure on consumers the last two years have already had a negative impact on the breweries and sales. The lockdown has just been the last nail in the coffin for us,” Nelissen explains.

Because Mzansi’s craft brew industry remains relatively small compared to the rest of the world, Nelissen believes that “government’s ban on alcohol sales have made it impossible for small businesses who do not have the resources, to carry on with business.”

He tells Food For Mzansi that they will continue to try and accommodate all their creditors. However, he expects the timing of payments to be an issue. Their own customers have been slow to pay due to cash flow constraints.

Craft breweries are in serious danger

Wendy Pienaar, chairperson of the CBASA, says that they are extremely saddened by the news of the malting company’s permanent closure. “We sympathize with the staff who have been personally effected,” she adds.

According to Pienaar the closure of Walts Malting will exacerbate the financial stress on breweries as they will now have to import all their specialty malts. With the poor exchange rate, Pienaar believes it will be exceptionally difficult for breweries to purchase malt, especially after the long periods of no income.

Wendy Pienaar, chairperson of Craft Beer Association of South Africa.

Pienaar says CBASA supports and appreciates the measures being implemented by government to combat the spread of the virus. However, the effect of the prohibition of alcohol trade during both level five and four of the lockdown has been devastating to the craft beer industry.

The association have noticed that 60% of its 240 members have been forced to retrench staff during this time. In addition, 50% of the group’s members have indicated that their breweries are in serious danger of closing by the end of May.

In order to save their members’ businesses, Pienaar states they will continue to implore government to give some provisions to the industry regarding online alcohol trading and controlled production.

The rise in illicit alcohol sales continues and Pienaar fears that this will have a devastating long-term effect on both the craft brew industry and the economy.

“We are concerned about the increase in South Africans producing dangerous concoctions at home using ingredients such as methylated spirits which is exceptionally harmful and can be fatal. There is also the additional increase in criminal activities with stores and storage facilities being looted,” Pienaar adds.

A big blow for SA craft beer industry

The news of Walts Malting’s closure also came as huge shock to renowned South African brewmaster Apiwe Nxusani-Mawela. She has used the manufacturer’s malts in her own brews for quite some time.

Apiwe Nxusani-Mawela, Owner of Brewster Craft

According to Nxusani-Mawela the manufacturer has invested time in expanding its distribution, which made it easier for brewery owners like herself.

She says: “This is a big blow for the South African craft beer industry and some barley farmers. Through Walts Malting the industry was starting to become self-sustainable and not heavy reliant on imports or bigger brewing companies.

“They made things easier in the industry. Because of them a lot of local brewsters had easier access to local manufactured malts and they were also offering the different malting styles that we could not afford to import or buy from bigger entities.”

Walts Malting has further communicated that its admin and sales staff would still be available till the end of May to assist customers with orders. The manufacturer pleads that customers pay all their outstanding invoices as soon as possible.