A study on the impact of the brewing sector in South Africa has found that the industry, which has recovered to pre-COVID-19 levels, continues to play an important role in stimulating the economy.
The 2019 report, which was conducted and compiled by Oxford Economics, used three metrics — gross value added (GVA), employment, and government tax revenue — to determine the sector’s influence on the economy. He notes that most of the findings are based on the local production and sale of beer.
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The study estimates that in 2019 the sector contributed R71 billion in GVA to 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”, says the director of Oxford Economics. economic impact consultancy (Europe and Middle East), Pete Collings.
“What we can clearly see is that the beer sector matters in South Africa,” Collings said in a presentation of the findings on Tuesday.
He indicated that of his tax contribution of R43 billion, 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 pegged at R1 on every R79 of GDP and R1 on every R30 of government revenue in South Africa in 2019.
It also indicates that the sector employed 249,000 people in 2019, with 49% of the 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 therefore generates a lot of [number] labor-intensive jobs.
“On average, brewery employees were around nine times more productive than a typical South African worker,” Collings further notes.
He says that in total, the retail and hospitality sector sold R73 billion worth of beer to consumers in South Africa in 2019.
Brewing Industry Feedback
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 farming. We expect high yields on our barley next year and look forward to innovation and research.”
South African Breweries chief executive Richard Rivett-Carnac says accelerating transformation and improvement in reliable energy, water and transport routes, along with preventing crime and corruption, will take the sector a long way.
He says that the beer sector continues to be a major contributor to the overall economy. “The industry needs to make sure it grows responsibly and remains sustainable.”
The CEO of Heineken SA, Jordi Borrut, says that the future of the sector is bright with important opportunities arising from the move to the “green agenda”.
“I predict load shedding won’t be a problem for us in the near future,” he adds.
“So far, we have installed 14,000 solar panels at our breweries and we are working hard to become grid independent.”
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Nondumiso Lehutso is a Moneyweb intern.