South Africans denied legal alcohol sales during bans to contain the Covid-19 pandemic now risk shortages due to supply-chain disruptions affecting glassmakers.
Consol Holdings Ltd., the largest glass manufacturer in Africa, is battling reduced stock and a limited ability to ramp up manufacturing quickly, according to Commercial Executive Dale Carolin. Global shipment delays and soaring freight rates are also hampering the ability to import bottles, he said.
Consol in 2020 suspended the construction of a R1.5 billion production plant in South Africa over concerns about the government’s fondness for booze bans. Ostensibly to ease the burden on hospital emergency wards, the state made alcohol trading illegal four times between March 2020 and August 2021, without ever giving a fixed timeframe for the prohibition.
At one stage during the first and longest ban, Consol warned it may be forced to shut glass furnaces, which cost R8 million a day to operate and can’t easily be switched on and off. Despite the company’s woes, German’s Ardagh Group SA agreed to buy the firm for just over R10 billion in November.
Another challenge to Consol is that some drinkers have shifted to premium purchases, where “additional growth has exceeded historical offtake,” Carolin said. Consol has been supplying more bottles this December than it has in previous years, and demand has exceeded its ability to produce, he said.
Consol has now reinstated the expansion project, but it will still take months to get up and running. That means the glass-shortage problem is likely to remain for the foreseeable future.