South Africa’s liquor industry, particularly craft distillers and brewers, have been hard hit by the protracted lockdown and ban on the sale of alcohol, with fears that many may not be able to survive.
Expecting to take years to recover, the sector hopes that it may survive by collaborating and innovating. This emerged during an online panel discussion hosted this week by Messe Muenchen South Africa, the organisers of the food & drink technology (fdt) Africa trade fair, which will be held in July 2021.
Moderated by Clive Belcher, Chairperson of the Institute of Brewing & Distilling (IBD) Africa sector and MD of Global Beverage Solutions, the panel included Craft Beer Association South Africa (CBASA) Chairperson Wendy Pienaar, Brew Master and founder of Brewsters Craft Apiwe Nxusani-Mawela, Southern African Craft Distilling Institute (SACDI) Secretary Pro Tem. Hendré Barnard, and “The Brewmistress” Brew Writer Lucy Corne.
Panellists noted that the sudden lockdown had left brewers with beer still in tanks, had dried up key contracts and cash flow, and had negatively impacted supply chains, meaning that most would be unable to pick up production immediately on the lifting of a ban on alcohol sales.
Nxusani-Mawela said: “Brewing beer is a process – it takes three weeks, so restarting won’t happen overnight. In addition, cash flow is a problem, so buying raw materials and packaging will be a tight squeeze – if we can source these at all. It won’t be easy.”
Pienaar added: “There are also operational issues to consider – like getting staff safely to work, and making the brewery safe for customers and staff. Even if the ban is lifted, it won’t be the end of the challenges we will face.”
In addition to challenges brewers and distillers would face in obtaining yeast, hops, botanicals and bottles, Barnard noted that producers would likely find that neutral spirits would be diverted for making sanitiser. “If producers are able to access alcohol, they might be able to get production up and running in around a week after the ban is lifted, but distillers and brewers will take a lot longer.”
Survival strategies
Noting that craft brewers and distillers had been achieving slow growth even before the ban, the panelists said there would be tough times ahead for the entire sector.
However, craft brewers and distillers could potentially survive by innovating and collaborating.
Barnard said the first market likely to open after than ban was online sales, “Craft brewers and distillers who haven’t done so yet need to get an online sales portal live in the next week, or they could miss that opportunity.
He also noted that the market would become more price sensitive, and that brewers and distillers would have to prepare for this: “We need to face the very real possibility that the market is going to change – we are in a recession, and the first thing that suffers will be luxury goods.
“This is not going to be a return to normal business, and we need to prepare ourselves. Some things will become more expensive to produce – certain raw materials and bottles will be more expensive. So, if you are spending R50 to R60 on packaging, you need to consider rebranding, using cheaper packaging, and passing the savings on to consumers.”
Pienaar said collaboration could help the industry survive: “We need to think about buying as a consortium, working together, becoming more creative in using what is available. We also need to do market research to make sure that we are producing what the market wants and will move quickly.”
Corne echoed this view, saying craft brewers and distillers could look at offering lockdown specials, and could put on hold bottling and canning and instead look at selling beer in 2 litre refillable ‘growlers’ to cut costs. “It’s going to be difficult, financially the industry is going to be really struggling, but customers will also be struggling financially, so the industry needs to look at products the market can afford.”
Now is the time for brewers and distillers to work on industry collaborations, market awareness and innovative new ways to go to market, the panelists said. They should also be preparing to reopen production by sourcing the safety equipment and personal protective equipment their factories and staff would need once the ban on alcohol production was lifted.
“food & drink technology Africa has always been a hub of local and international industry collaboration and innovation, and as the world adapts in this new environment, we are committed to working with stakeholders to help them overcome the emerging challenges,” says Dain Richardson, Senior Exhibition Manager of food & drink technology Africa.