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We’re starting to get a taste of the knock-on effects of the regulations mandated during the lockdown, including the restrictions placed on businesses.

The ban on the sale of alcohol was in place for alert level 5 and 4, briefly lifted under alert level 3, and finally set aside under alert level 2, but it might have come too late for many.

In May, a last-minute concession from the National Coronavirus Command Council that “harvesting and storage activities essential to prevent the wastage of primary agricultural goods” would be allowed, enabled the wine industry to resume making wine, but as the lockdown continued, harvesting crops and storing wine became difficult.

SAB reached capacity for the amount of beer that it could safely store, eventually dumping at least 25 000 litres.

Now, liquor group Distell has come forward, saying that the prohibition cost it an estimated R4,3 billion in lost revenue.

The company, which makes spirits, ciders and wines, reports IOL, recorded a whopping 64% profit drop for the year to June 30.

“As part of measures introduced to improve the liquidity of the group… the board has taken the decision to temporarily suspend the payment of dividends,” Distell said in a statement.

Headline earnings per share, the main profit measure in South Africa, came in at 235.3 South African cents ($0.1395) for the year to June 30, compared with 652.9 cents a year earlier.

Now that the regulations have been amended, the group has only managed to fill 54% of its open orders, due to constraints on local ports and cancellations from customers partly linked to delays at the Cape Town harbour.

To try and manage the problem, all South African-based Distell employees will be facing a salary cut of between 10% and 12,5%.

Here’s BusinessDay with CEO Richard Rushton:

“Looking ahead, we anticipate a tough domestic environment, with falling disposable income and increasing unemployment our key concerns.”

He is confident that with the way the company is managing the situation, it should be able to stay “flexible and recession-proof.

“Our more focused and diversified portfolio of brands along price points, occasions and innovation in response to consumer trends will enable us to position ourselves well for any recovery,” he said.

We might have booze again, but it’s going to take a while for the industry to get back on its feet.

Tough times ahead.

[source:iol&businessday]