Alcohol ban sees AB InBev scrap R2.5bn investment in SA

By Janice Kew

(Bloomberg) – Anheuser-Busch InBev NV’s South African division cancelled a further R2.5bn ($165m) of investment after the government banned alcohol sales for a third time to control a resurgence of coronavirus cases.

The move brings the amount of spending called off by South African Breweries to R5bn since the Covid-19 pandemic began to take off in the country 10 months ago. President Cyril Ramaphosa’s government has used various forms of drinking restrictions as a means of managing the crisis, easing the burden on hospital wards that typically have a high volume of alcohol-related cases.

SAB, the maker of popular lagers Castle Lite, Hansa and Carling Black Label, has toughened its stance since the latest prohibition was announced on Dec. 28. The country’s biggest brewer said last week it will challenge the ban in court, saying the measure is unconstitutional.

Read also: AB InBev goes to court over South Africa’s alcohol ban

“Given the material impact that this third ban on the sale of alcohol has on our business, and the possibility of further bans, we have no choice but to halt these investments for the foreseeable future,” SAB’s vice president of finance, Richard Rivett-Carnac, said in the statement.

The spending had been earmarked for upgrades to operating facilities, product innovation and new equipment at selected plants, the company said.

AB InBev, the world’s biggest brewer, acquired SAB as part of its takeover of SABMiller in 2016. The South African company can trace its roots back to Johannesburg’s late 19th century gold rush, when it catered for thirsty miners.

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