LIQUOR BILL 2003 LIQUOR BILL 2003 PRESENTATION BY UNB CAPE TOWN 13 MAY 2003

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LIQUOR BILL 2003LIQUOR BILL
2003PRESENTATION BY UNBCAPE TOWN13 MAY 2003
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We have divided our presentation in following
parts 1. Sorghum beer - History 2. Sorghum
beer - Today 3. Current status - Distribution
- Licencing 4.
Problems with current liquor bill 5. Our
recommendations
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Sorghum Beer - Brief History
- It has been the traditional drink of Southern
Africa for hundreds of years.

• It is an integral part of South African cultural
  heritage and is a must at
• Marriages
• Funerals
• - Reconciliations
• - Maturing to Adulthood ceremonies
• - Child Birth Functions
• - Thanksgivings
• - Unveiling of Tombstones, etc.

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- Sorghum Beer enjoyed a position of pride in
the society.
- The political environment suppressed Sorghum
for many years
- Organised commercial Sorghum industry has
been declining since then.
- Shebeens came into being to supplement
survival for poor black families.
- Most are run by women .
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- Since early days when government controlled
distribution of Sorghum these
Shebeens have been illegal and
constantly harassed.
- Because of their inability to procure Sorghum
Beer legally, they went for concoctions /
alternatives
- Wrong! Yes, but they must earn bread to
survive and know no other way to make a
living.
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- Sorghum Beer is unique to Africa
- Sustaining the future of Sorghum should be
part of the African Renaissance
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SORGHUM BEER TODAYSORGHUM BEER
-Unique and traditional sub-Saharan
beverage. -Brewed with malted Sorghum and Maize
grits. -Distributed,sold,transported,stored and
consumed in actively fermenting stage. -Shelf
life - 4 to 6 days, after which it is unfit for
consumption.
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- Opaque,viscous,sour and pinkish brown in
color. - Alcohol content lt3.2 - High
nutritional value. Rich source of protein,
carbohydrate,complex starch, Vitamins
Minerals. - Largely consumed in township, rural
and informal settlements.
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- Though a delicate product, can easily be
made at homes/ Shebeens with easily available
ingredients like Malt,Mealie-meal, bread etc.
in small quantities. - Industrially brewed
Sorghum beer is more hygienic and nutritious
due to technology, proper equipment and rigid
quality control in manufacturing and handling
of beer.
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SORGHUM BEER MARKET IN S.A
MIO LITRES - Total Sorghum beer
sales/annum 1700 100 -
Industrially brewed Sorghum beer 425
25 - Non- industrial Sorghum beer
1275 75 - Sorghum
Beer from malt (85,000T) 1145 67
- Sorghum beer from beer powder (22000T)
130 8
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- Sorghum beer market declining 5 - 6 year on
year. - 12 operating breweries and about 20
microbreweries. - Also brewed in about 100,000
shebeens / homes. - Consumers - Predominantly
black, LSM 1- 4
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CHALLENGES - DISTRIBUTON

• - 4 - 6 Days Shelf life
• Lack of infrastructure in informal market
• Lack of access to banking channels poor credit
  rating of most players
• Security concerns
• Lack of entrepreneurship
• Low margin

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SORGHUM BEER TRADE
MARKETS OUTLETS MARKET SHARE NOT LICENCED
INFORMAL
SPAZAS SHEBEENS ZOZOS 75 99
FORMAL
BOTTLE STORES EATING HOUSES GENERAL DEALERS 25 10
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INFORMAL TRADE
SHEBEENS SPAZAS ZOZOS MONTHLY R500 R
3000 TURNOVER LITERACY LEVEL/ EDUCATION
NEGLIGIBLE OUTLAY OF INFORMAL OUTLAY SECTION
OF RESIDENCE SMALL EXTENSION ZOZO
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DISTRIBUTION PATTERN
UNB QUANTITY VOLUME (MILLION) AVE PER MONTH
OWN DEPOTS / PRIVATISED DEPOTS 60 34,0 100
DISTRIBUTORS 2500 19,5 57
CALL COLLECT 4000 3,0 9
DRIVER SALESMAN 190 11,5 34
RETAILERS 100 000 34,0 100
TOTAL SORGHUM BEER
RETAILER (TOTAL 250 000 142,0 0
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• UNBS DISTRIBUTION INFRASTRUCTURE
• UNB has a fleet of around 500 vehicles,
  delivering about 90 of the total product to
  depots / distributors/retailers
• UNB has about 60 depots
• UNB employs 190 Driver Salesman
• UNB continuously develops and provides financial
  support to small entrepreneurs

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• -Trade will come to standstill, if these
  facilities are withdrawn. Consumer will have no
  option but to switch to Homebrew, which as
  explained earlier is far less hygienic and at
  times dangerous.

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BASIC PROBLEM

• TREATING SORGHUM BEER AS ANY OTHER LIQUOR PRODUCT
  INSPITE OF FOLLOWING BASIC ISSUES
• Short shelf life
• Current status of Sorghum traders
• Unlicensable premises
• Poor financial status
• Past prosecutions
• Complicated expensive licensing process

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PROVISIONS THAT CANNOT BE FOLLOWED

• Separation of distribution from manufacturing (3
  Tier)
• Due to,
• Short Shelf Life
• Long Chain
• Need of Fleet
• Finance

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• Licensing Requirements
• Western Cape Govt. had acknowledged these facts
  and provided separate provisions in Green Paper.
• Gauteng / E. Cape still proceeding treating
  Sorghum Beer as other Liquor product.
• Other provinces may do so in absence of proper
  guidance in the matter in the National Bill.

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RECOMMENDATION
Treat Sorghum Beer separately in the bill
for a) Licensing Use simple permit system for
distributor / retailers for next 10
years. b) Distribution - Do not prohibit
manufacturer from distribution in view of shelf
life and trading environment. Manufacturer
should be allowed to distribute and condition of
pre-invoicing be waved in view of its
impracticability.
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c) MICRO MANUFACTURER Define qualifying volume.
If qualifying volume is more than 100,000
lit. per annum, other Sorghum manufacturer should
not be prohibited from operating Micro
Manufacturing unit and licensing / registration
should be required under National Bill.