AB-Inbev writes down $2.5bn in South Africa because of the alcohol ban

Brewer AB InBev has written down $2.5bn in South Africa to account for losses from the COVID-19 lockdown alcohol ban in South Africa. In Q2, which covers the first lockdown period, volume sales in sou9th Africa fell by 60%. Although the ban was lifted in June, it has since been re-instated, bringing more financial pain for alcoholics drinks companies.

Globally, volume sales of the company’s brands, which include Budweiser, Corona and Stella Artois felly by 17% in Q2. Across H1, volume sales fell 13%. South Africa looks to be its worst performing market: sales in Q2 in both Brazil and the US fell by just 6%, in Europe by around 15% and in Mexico by 36%. In China, sales fell by 5% in Q2 but actually rose in May and June.

In some markets, AB InBev, especially in the northern hemisphere where consumers have emerged out of lockdown and it is summer. In South Africa, another alcohol ban means there will be further financial pain.

At the end of June, South African wine and spirits manufacturer Distell released a trading update that showed group revenues had fallen by 15.% and volumes had fallen by 23.3% for the period July 1st 2019 to June 19th 2020, compared to the same period a year earlier.

At the time, Distell pointed to alcohol bans in Botswana and Namibia, both important markets, as contributory factors. However, its Kenya business had proven resilient. Kenya has recently banned on-trade sales of alcohol for 30 days in a bid to curb transmission of COVID-19.