COVID-19 alcohol ban hurts Distell’s full-year earnings
The alcohol industry has been through quite a roller coaster ride, since March this year. COVID-19 alcohol sales bans, led to job cuts, loss in taxes and a thriving black market. Releasing its full year results, South African-based global drinks company Distell reported a decrease of 64 per cent in earnings. Distell CEO, Richard Rushton CNBC Africa for more.
Tue, 01 Sep 2020 14:12:50 GMT
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AI Generated Summary
- The decision to cut salaries instead of implementing job cuts reflects Distell's commitment to its employees and values during challenging times
- Distell's proactive engagement with the government highlights the company's dedication to addressing economic impacts and societal consequences of alcohol bans
- Despite financial setbacks, Distell remains optimistic about its African expansion plans and continues to invest prudently in high-growth markets
The alcohol industry has faced a turbulent time since the onset of the COVID-19 pandemic, with numerous challenges including job cuts, loss in tax revenue, and the rise of the black market. South African-based global drinks company, Distell, recently released their full-year financial results, revealing a significant decrease of 64 per cent in earnings. CEO Richard Rushton discussed the company's approach to navigating these challenges in an exclusive interview with CNBC Africa. Distell decided to prioritize employee well-being by opting to cut salaries instead of resorting to widespread job cuts, a move aligned with their values and commitment to their team. Rushton emphasized the importance of collective action during tough times and expressed confidence in their dedicated workforce's ability to weather the storm. Despite the challenging financial results, Distell maintained a positive outlook and highlighted their efforts to engage with the South African government regarding the alcohol sales ban imposed during the pandemic. Instead of pursuing legal action, the company chose to collaborate with the government to address the economic impacts and societal consequences of the ban. Rushton underscored their desire to contribute to both economic recovery and social responsibility, showcasing a proactive and constructive approach in dealing with regulatory challenges. The interview also touched upon Distell's expansion plans in Africa, with a focus on volatile markets such as Mozambique, Angola, Kenya, Nigeria, and Zimbabwe. Despite facing economic uncertainties and COVID-related disruptions, Distell reported strong revenue and volume growth prior to the lockdowns in Africa. The company remains optimistic about the long-term growth potential in the region and continues to invest prudently in expanding their presence across the continent. As South Africa gradually eases restrictions and reopens alcohol sales, concerns about a potential spike in COVID-19 cases loom large. Rushton acknowledged the risks associated with increased social gatherings but expressed confidence in Distell's ability to navigate the challenges ahead. The company has taken proactive measures to strengthen its balance sheet and prepare for potential disruptions in the year ahead. Rushton emphasized the need for collaboration between industry players and government to address pandemic-related issues effectively and avoid drastic measures like full-scale alcohol bans. By fostering dialogue and cooperation, Rushton believes that a more nuanced and sustainable approach can be adopted to mitigate the impact of future lockdowns on both businesses and public health. Overall, Distell remains committed to weathering the storm and emerging stronger from the current challenges, leveraging its dedicated team and strategic investments to secure a resilient future in the evolving global market.