South Africa: Beer sector continues to play significant role in stimulating South Africa’s economy
A study on the impact of the beer sector in South Africa has determined that the industry, which has recovered to pre-Covid levels, continues to play a significant role in stimulating the economy, the Money Web reported on November 23.
The 2019 report, which recorded the industry’s standard performance before the wake of the pandemic, was presented during a media briefing on Tuesday, to parallel the industry’s current influence on the country since its recovery.
The study, conducted and compiled by Oxford Economics, used three metrics – gross value added (GVA), employment and tax revenue for government – to determine the sector’s influence on the economy. It notes that most of the findings are based on the local production and sale of beer.
The study estimates that in 2019 the sector contributed R71 billion in GVA towards South Africa’s GDP and R43 billion in taxes.
“Of the R71 billion GVA contribution to GDP, R25 billion or 35% came from the direct channel, R30 billion or 42% came from the indirect channel and R16 billion or 23% came from the induced channel,” notes Oxford Economics’ director of economic impact consulting (Europe and Middle East), Pete Collings.
The direct channel is the sector’s direct employment of staff; which in turn generates GDP and taxes. The indirect channel is the money spent with suppliers who employ staff, generate GDP and tax, and use other suppliers. The induced channel includes employees, who aren’t part of the beer sector, who spend money in the wider economy and generate more GDP, jobs and taxes in relation to the sector.
“What we can clearly see is that the beer sector matters in South Africa,” Collings said.
He indicated that of its R43 billion tax contribution, R32 billion (73%) came from the direct channel, while R7.4 billion (17%) came from the indirect channel and R4.4 billion (10%) came from the induced channel.
The study says this means the sector was linked to R1 in every R79 of GDP and R1 in every R30 of government’s revenue in South Africa in 2019.
It also indicates that the sector employed 249 000 people in 2019, with 49% of these jobs coming from the indirect channel.
Collings adds that for every job at a South African manufacturer, there were six in the downstream value chain. “As such, the downstream value chain is very service dependent and so generates a large [number] of labour-intensive jobs.”
“On average, beer manufacturers’ employees were around nine times as productive as a typical South African worker,” Collings further notes.
He says in total, the retail and hospitality sector sold R73 billion worth of beer to consumers in South Africa in 2019.
Commenting on its impact on the economy Beer Association of South Africa CEO Patricia Pillay said: “Beer is something that is very local and supports local communities. Another important pillar is beer agriculture. We’re expecting high yields in our barley next year and we look forward to innovation and research.”
South African Breweries CEO Richard Rivett-Carnac says accelerating transformation and improvement in reliable power, water, and transport routes – along with the prevention of crime and corruption – will take the sector far.
He says the beer sector is still an important contributor to the overall economy. “The industry needs to ensure that it grows responsibly and remains sustainable.”
Heineken SA MD Jordi Borrut says the future for the sector is bright with significant opportunities arising from the move to the “green agenda”.
“I predict load shedding won’t be an issue for us in the near future,” he adds.
“So far we have installed 14 000 solar panels at our breweries and we’re working hard to be independent from the grid.”
23 November, 2022
