09 July 2020
PRESS STATEMENT BY WENDY PIENAAR
CHAIRPERSON OF THE CRAFT BREWERS ASSOCIATION OF SOUTH AFRICA
09 July 2020
Craft brewer survey reveals the devastating impact of the lockdown on the industry
After a nine week ban on the sale of alcohol and the resumption of limited trading under alert level 3 of the lockdown, the Craft Brewers Association of South Africa (CBASA) recently ran a survey amongst craft brewers to get a clearer picture of the impact of Covid-19 and the lockdown on the sector.
Responses received revealed the industry has been hard hit, with a staggering 87% of brewers saying that they are currently unable to meet their monthly expenses.
108 breweries and brew pubs from across the country responded to the survey, with the following breakdown across provinces:
- Western Cape: 45
- Gauteng: 27
- KwaZulu-Natal: 21
- Eastern Cape: 6
- Mpumalanga: 4
- Free State: 3
- North West: 2
The survey covered a number of questions including how much respondent’s sales have decreased as a result of the lockdown, have they received UIF payments from government; have they had to retrench staff, have they had problems buying raw material during the lockdown; the level of trade under alert level 3 and questions regarding the implementation of Covid-19 protocols and guidelines.
Responses received revealed the following:
- 53% of respondents indicated that their sales have decreased by between 60-100% since the start of lockdown;
- With 24% of these respondents indicating that their sales have dropped by between 90-100%; and
- 7 breweries have been forced to close their doors permanently during June.
When it comes to their employees, 84 out of 109 respondents applied for the Covid-19 UIF benefit with:
- 16 of these applicants receiving payouts each month;
- 33 only receiving a payment in May; and
- 35 receiving no payouts to date.
Unfortunately, 63% of craft breweries and brewpubs have had to retrench staff during May and June as a result of the limited trading restrictions. Nearly 70% of these businesses indicated that they had to retrench over 50% of their employees, with eight breweries having to retrench all their staff members.
To compound this situation 76% of brewers also reported difficulties and delays when it comes to purchasing their raw materials due to suppliers struggling with the COVID-19 shut down including no production occurring during level 4 and 5, issues at the ports and the poor rand/dollar exchange rate.
The survey also revealed that many brewers have had to come up with creative solutions in order to keep their businesses afloat during this difficult period:
- 10% of respondents have amalgamated with another brewery to reduce costs;
- 20% have changed their recipes or production methods to reduce the cost of each brew; and
- 3% have found second jobs to supplement their income.
Some brewers also indicated that they had moved to the manufacturing of other products such a fruit juice, cleaning products and other non-alcoholic beverages.
Encouragingly, 77% of breweries had found it fairly easy to implement Covid-19 health protocols at their businesses due to the high level of sanitation usually implemented at a brewery.
Of major concern is that only 10% of brewers believed that they would be able to continue trading in the near future – should the current restrictions on the trade of alcohol and the prohibition of on-consumption sales continue.
Brewers raised the following concerns in the survey:
“We won’t make it. Rent and keeping the staff going with no sales means we won’t have the cash flow to buy ingredients to start up production again unless we can get an investor to help us through.”
“Threat of business failure and shutdown. Barely survived the last lockdown. Online only is not enough to sustain the business. We need some on-consumption sales channels that the whole market has evolved for.”
“While opening the industry more and specifically on-consumption sales quickly and safely will be the first step on the road to recovery for brewers – for others, irreparable damage has already been done with our sector already losing 15% of South African craft breweries and 68% of those still trading having a decidedly negative outlook for the sustainability of their businesses going forward. The future of craft in South Africa is extremely unpredictable and we call on the government to work with us to give our sector a fighting chance of survival.” said Wendy Pienaar, Chairperson of the CBASA.
Patricia Pillay, CEO of the Beer Association of South Africa said: “The craft brewing sector is a vital to the long-term sustainability of the South African beer industry. Not only does it support thousands of livelihoods, it contributes to an increasingly transformed, differentiated industry and has increased consumer choice for beer drinkers. We have seen a remarkable growth in the craft brewer sector over the past few years and so it is extremely concerning to see the devastating impact Covid-19 and the lockdown has had on this vibrant industry. The BASA remains committed to working with government to come up with joint solutions to ensure the safety of communities, will protecting the thousands of livelihoods and small businesses the beer industry supports.”