Distell processes R440m in orders
• Industry leaders make proposals for safe reopening of liquor trade
Distell, the makers of Hunter’s Dry, Nederburg, JC Le Roux and Klipdrift, among others, says the easing in agricultural export regulations under level 4 of SA’s coronavirus lockdown will allow it to process about R440m worth of open orders. “The group will leverage this opportunity to generate revenues notwithstanding the bottlenecks that are being encountered at the ports and with current transport regulations in SA,” the company said.
Distell, the makers of Hunter’s Dry, Nederburg, JC Le Roux and Klipdrift, among others, says the easing in agricultural export regulations under level 4 of SA’s coronavirus lockdown will allow it to process about R440m worth of open orders.
“The group will leverage this opportunity to generate revenues notwithstanding the bottlenecks that are being encountered at the ports and with current transport regulations in SA,” the company said.
Distell was among the alcohol industry leaders who had a virtual meeting with the department of trade & industry last week to propose how to responsibly reopen the liquor trade while keeping gatherings at bars illegal. They presented “pragmatic” plans to open industry while selling in a way that enables social distancing and off-site consumption of alcohol.
They propose online orders and sales, normal trading hours to avoid queues, and a click and collect model using SMSes in lower-income areas. They warned alcohol is being sold at high prices on the black market and that small traders are experiencing high levels of desperation and hunger.
Distell CEO Richard Rushton said there is “an air of desperation and loss of hope” by small businesses that cannot trade,
He urged the government to allow responsible sales and give people the ability to earn an income again.
Distell’s plan is also to use 54,000 registered licensed taverns and stores to sell alcohol for off-site consumption and at the same time distribute masks and sanitiser in communities. Food parcels could also be distributed, as distribution of food remains a challenge leading to long lines, and taverns are well distributed across communities.
“We have provided a pragmatic approach that might responsibly help fight the pandemic and restore economic activity.”
Distell has proposed a click and collect model in lowincome areas. where people order via sms and then fetch orders at taverns to reduce queuing. It will use existing loyalty programmes with small distributors and taverns to distribute airtime
Licensed premises that break the law and sell alcohol for use on-site will not be provided with alcohol, forcing everyone to observe the ban on most forms of social gatherings.
“You need a carrot and a stick,” Rushton said.
Restricting the sale of alcohol to a few hours at limited outlets at the beginning of the week as presented in a leaked government plan would cause queues and undermine social distancing, he said.
Distell suggests normal trading hours and online ordering of alcohol and delivery so “people can access responsible quantities of alcohol in their homes”.
Many consumers have pentup demand due to the ban on buying alcohol since late March.
He said he felt the department of trade & industry officials had listened and were interested in a collaborative approach.
“But there is still a long way to go. We are needing to meet the department of health and social development.”
Rushton warned the “burgeoning illicit trade” similar to the black-market alcohol trade during the period of prohibition was encouraging ordinary citizens to join crime and illegal networks.
Cigarettes, which are also banned, have thrived in the black market with a University of Cape Town study released last week showing 90% of smokers still accessed cigarettes.
It surveyed 16,000 people online and found they were buying unregistered brands from street traders and at small shops. Reports by industry leaders are hearing that black-market alcohol costs three to five times more than normal.
The industry representatives spoke to the government of experiences in other countries during the pandemic such as in Italy where a beer factory was kept open safely during the height of the pandemic. Italy now has more than 225,000 coronavirus infections.
A reopening of bottle stores in India led to long queues described by some media as a “manic rush”.
Rushton questioned if the reduction of trauma cases in SA hospitals was due to the alcohol ban and instead suggested reduced traffic had played a huge role. There are reduced trauma cases in hospitals around the world under lockdown while no-one else has the draconian alcohol laws, he said.
Distell released a statement on Friday saying it expects headline earnings per share (HEPS) to fall by 60%-80% in its year to end-June, and faces even more uncertainty regarding the easing of lockdown regulations in SA, and writedowns of its stock.