Beer Giant Scraps $165 Million South Africa Investment on Alcohol Ban

Barrier signs reading 'Blocked' stands in front of blocked consignments of beer, stacked in branded crates, in a warehouse at the SABMiller Plc Alrode brewery and bottling plant, a unit of Anheuser-Busch InBev SA, in Johannesburg, South Africa, on Tuesday, Aug. 11, 2020. South Africas ban on alcohol sales has put investment projects worth at least 12.8 billion rand ($742 million) on hold.

(Bloomberg) -- Anheuser-Busch InBev NV’s South African division canceled a further 2.5 billion rand ($165 million) 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 5 billion rand 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.

“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 Plc 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.