Here is the reason government decided not to ban liquor sales as part of the latest Covid-19 restrictions: The illicit alcohol trade sales by volume have now overtaken the entire combined wine and cider sectors. And to add insult to injury, SARS lost R11.3 billion due to illegal wine sales in 2020.
These, and other shocking findings, are revealed in a new report by Euromonitor International. The market research leader found that illicit alcohol trade now stands at 12% of the R177.2 billion total industry market value.
Plus, researchers say the money SARS lost in 2020 would have been enough to pay for more than two million child support grants for a year or put additional 34 000 police on the streets.
Meanwhile, the alcohol industry has cautiously welcomed stricter Covid-19 lockdown measures announced by by President Cyril Ramaphosa earlier this week.
The news however comes as “too little, too late”, as producers battle to pick up the pieces in the aftermath of the series of alcohol bans in 2020.
“I am normally optimistic, but things are bleak,” says co-founder of Pimville Gin, Yongama Skweyiya.
And Sandile Makwanazi, winemaker and co-founder of Tumbaga Wines, tells Food For Mzansi he saw his business meet its end in mid-May due to the series of alcohol bans.
“The damage is irreversible. The farm got liquidated and sold last week and that is that.”
Makwanazi adds, “There is nothing that we can do. It is just one of those things. We understand what Covid is doing, but at the very same time our livelihoods are attached to something that is being punished. We do not really understand how alcohol is responsible for this, but it is one of those things.”
Too little too late for most
A producer of South African spirits, Skweyiya says the repeated prohibition of liquor over the last year has left the sector in troubling waters. “We are in a very dark place, to a large extent we are quite pessimistic about the future.”
Producers have argued that the earlier restrictions on the legal sale of alcohol were neither an effective nor sustainable measure to reduce pressure on the public health system.
Makhwanazi believes government’s decision to not impose a fourth ban comes because of “its guilty conscience.”
He says, “A lot of businesses had to shut down because of the ban on alcohol. Previously, we had guys who were exporting 80% of their produce and 20% was local, but now suddenly they had to change because most of the destination countries for exports had to close down.
“The lockdown has seen many wine producers now target local sales and trying to create a local following of South African wine, which we never really looked into all these years.”
Picking up the pieces
The past year has been a period of reinvention, Makhwanazi says.
“If you do not learn from your mistakes, it is pointless going through them. The whole exercise helped me reinvent myself; how to position myself in such a way that (I can go on) despite whatever else is happening.”
Skweyiya echoes his sentiments.
“It is literally about preservation right now. The greatest lesson was the first one, we thought we were going to be in lockdown for a month, maybe a month and a half.
“For us to distil hard liquor, we paid up to twice the tax on the price of alcohol. We were out of pocket twice; we couldn’t sell in the market but because we had produced, we had to pay the taxes on it.
“It is what it is and now we are just making sure that we are preserving whatever we have in terms of cashflow.”
Latest Covid-19 restrictions welcomed
Meanwhile, the South African Liquor Brandowners Association (SALBA) says it shares government’s concern over the pandemic and will continue to support meaningful measures to flatten the curve.
SALBA chair Sibani Mngadi says, “We welcome the decision of the government to focus on restricting social gatherings and the new curfew hours.
“The decision to keep the alcohol trading environment open under the licence conditions and limitations of the curfew is welcome as taverns, bars, and restaurants are a critical part of the tourism business which we need to assist to recover.”