Liquor industry in a froth over bid to regulate bu
Liquor industry in a froth over bid to regulate business
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Warning that new law is not constitutional
Political Correspondent
CAPE TOWN Liquor manufacturers joined a chorus of opposition to the proposed Liquor Bill yesterday, arguing it was fundamentally flawed and open to constitutional challenge.
Wine farmers, SA Breweries, United National Breweries, the Wholesale Merchant Forum of the Wine and Spirit Industry as well as Woolworths, Pick 'n Pay, Shoprite Checkers and Makro, voiced their strong objections to the bill.
Tony van Kralingen, MD of SAB Millers's SA operation SAB, said in a submission to Parliament the "irrational" bill would introduce significant uncertainty into the industry as Trade and Industry Minister Alec Erwin would be allowed to regulate it by discretion. The whole architecture of the bill was also open to constitutional and other legal challenge.
"The bill does not provide for a predictable regulatory framework that allows business to make decisions and plan future investment," Van Kralingen said in his submission to the public hearings on the bill organised by the National Assembly's trade and industry committee and the National Council of Provinces' select committee on economic affairs.
"In effect the minister is being given carte blanche to manage the affairs of the industry as he sees fit without the criteria for his decisions on granting licences being clearly set out."
The bill proposes to abolish vertical integration in the liquor industry, separating manufacturing, distribution and retailing to create more opportunities for new players.
Van Kralingen said the bill would restrict the ability of manufacturers to make "economically efficient decisions on the route to market of their products".
The rigid structure proposed by the bill (which requires manufacturers to sell to distributors) "is not economically feasible", he said.
Both SAB and the Wholesale Merchant Forum of the Wine and Spirit Industry argued that the primary objective of the bill should be to regulate unlicensed retailers of liquor, such as shebeens.
Van Kralingen accused Erwin of reneging on understandings reached with the industry and was disturbed that the bill contained "glaring overlaps with the proposed black economic empowerment legislation" that should apply to all industries.
Supermarket retailers strongly supported the proposed extension of their grocer's licence to allow them to sell all kinds of liquor, including beer, as well as the right to do so on Sunday. This would be a default position for provinces without liquor legislation as the retail of liquor will be a provincial competence.
But the supermarkets strongly opposed the introduction of a three-tier system, which would prevent them buying directly from manufacturers and from acting as distributors from their warehouses.
The supermarkets said the system would result in an "enormous" increase in costs which would have to be passed on to the consumer.
Makro argued that an unintended consequence of the three-tier system was "that it imposes an unwanted middleman upon the value chain thus distorting targeted investment, price structure, profitability and levels of employment. The consumer will have to foot the bill."
May 14 2003 07:03:42:000AM Linda Ensor Business Day 1st Edition
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