South African Breweries (SAB) is set to dump 130 million litres of beer if they don’t get permission from government to transport alcohol during the covid-19 lockdown.
Refilwe Masemola head of communications at SAB, said that due to a production process that lasts several weeks, local storage at production facilities are close to capacity with bottled and packaged product. If they are not allowed to transport this beer to storage depots to clear space, the rest of the alcohol that is nearing the end of the fermentation process will have to be dumped.
This will add to the significant losses that the company has suffered since the start of the economic lockdown that government imposed to slow the spread of the novel coronavirus.
The losses extend all the way to the farmers who supply inputs like barley and hops to the breweries and distilleries. A large part of their market disappeared when SAB’s production cycle stopped.
Masemola explains that beer goes into different tanks through the different stages of fermentation. Because the cycle was interrupted by the lockdown restrictions that prohibit the transportation of alcohol, some of the product is now at risk.
Masemola says it is not a matter of selling alcohol. The company just needs to be able to move finished product between their own facilities for effective storage.
Lockdown hits all the way to the farm
She says the lockdown has had a dramatic impact on SAB’s operations.
“The lockdown means we as SAB are not able to produce, sell or distribute alcohol, so we have suffered an economical loss,” she says.
However, the SAB is not the only one affected by the lockdown ban on alcohol sales. The farmers who supply natural products like barley and hops to the company have also seen their primary market evaporate overnight.
André Hans (36) is a member of the Overberg Boerdery Trust that runs a 135-hectare grain farm in Caledon in the Overberg region of the Western Cape. He says they have been having a difficult time since the lockdown.
Hans and the rest of his partners produce barley for SAB for the production of alcohol and a large percentage of their income is depended on barley sales.
“It’s a little bit difficult, because we are depending on our barley to provide economic security. Since the lockdown we have been forced to plant alternatives, like oats, canola and wheat, that don’t have a sales market. The price of oats is not doing well.”
Even though they have continued planting barley as normal they have not been supplying the SAB because the factory has not been operating.
Hans says that he foresees a “tough, tough road” ahead for his farming business.