The boss of South Africa’s biggest beer maker has concerns ahead of next month’s budget speech

In an event highlighting the economic impact of the local beer sector, the South African Breweries (SAB) calls for more certainty in tax policy ahead of the Medium Term-Budget Policy Statement -which is set to be tabled before Parliament on the 26th of October .

SAB CEO Richard Rivett-Carnac said: “The truth is we – the beer industry – have a massive role to play in helping the South African economy recover and grow. With certainty policy, we can be allowed to make investment decisions and sustainably and predictably grow our business, and by extension, our economy.”

In the ‘State of the Beer Economy’ event, SAB launched the findings from a report conducted by Oxford Economics, one of the world’s leading independent advisory firms, to gain an understanding of the economic impact of the beer sector in South Africa.

To share these findings, the director of Consulting at Oxford Economics, Cobus De Hart, outlined the key results.

He revealed the beer category supported R71 billion in gross value-added contribution to South Africa’s GDP, which included R43 billion in tax payments to the government. To put this into perspective, De Hart indicated that beer represented R1 in every R79 of South Africa’s GDP in 2019.

“We assessed the upstream and downstream impact of the sector, which spans the entire value chain. We then quantified the data by unpacking direct, indirect and induced channels of impact.”

He also said that the average worker at a brewer was found to be nine times more productive than the average South African worker. In terms of these workers, he said the beer industry directly employed over 181,000 people, which represented 1.1% of national employment in 2019.

At the event, B4SA chairperson Dr Martin Kingston proclaimed the private sector as a core driver of economic recovery and stability in South Africa, calling for a more predictable and reliable policy landscape from the government.

“If you assume the flywheel of stability is increasing inclusive economic growth and that is driven by the private sector, then the private sector can only continue this in a predictable environment in which it can viably invest,” said Kingston.

He said the need for policy certainty is at the top of businesses’ agenda and forms a primary focus in their discussions with the government.

To echo this statement, CEO of the Beer Association of South Africa (BASA), Patricia Pillay said: “We need assurances as an industry from government to say that we can have a seat at the table and that when decisions are made, we are properly consulted and can participate.”

She added that beer’s value and contribution to the economy also includes the growth and development of beer tourism and beer agriculture in the country, with a broad and diversified value chain.

Today, the SAB hops farms have contributed up to R90 million in revenue to the Western Cape’s economy and employ over 1,500 people in George alone.

“We also have over 530 barley farmers producing barley for malting purposes across South Africa. Then there’s beer tourism – for those who may be unaware, South Africa is home to over 150 craft breweries, which are accessible through the digital, interactive Brew Routes maps, available online,” said Pillay.

“These small business owners create world-class beers and jobs in their communities. It is currently estimated that each of these breweries sustains 6-10 jobs. Policy certainty will be critical if we are to continue supporting and growing these sectors of our economy.”

The type of policy certainty required by the beer industry is specific to the excise policy, which Rivett-Carnac said has continually escalated beyond inflation year-on-year for over a decade, sometimes doubly so.

“We understand the reasons for the regulations, and we believe they play an important role, but it needs to be consistent,” said Rivett-Carnac.

For him, and for the beer industry, Rivett-Carnac believes regulatory certainty around excise is all about agreeing with the government on the role that private sector organizations like SAB can play as a partner.

“By working together, we can ensure that the business, the industry, and the communities that depend on us can grow sustainably with a 10-to-15-year view at the very least,” said Rivett-Carnac.

Read: Warning about South Africa’s beer economy and tax hikes

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