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Pick n Pay retrenches staff and implores government to review tobacco, alcohol bans

Supermarket giant Pick n Pay on Tuesday said 1 400 staff had accepted voluntary retrenchment packages and launched a broadside at the government over its ongoing ban on tobacco and alcohol sales as part of efforts to combat the Covid-19 pandemic.

The company said while the retrenchments had been in the pipeline before the pandemic, the restrictions on certain goods during a lockdown aimed at containing the virus had impacted on its profit margin, and urged President Cyril Ramaphosa’s government to call off the prohibition.

“I implore the government to review its decision, and to look at the issue in the spirit of responsibility and togetherness that the president has so rightly upheld,” Pick n Pay chairman Gareth Ackerman told the company’s annual general meeting.

He said apart from hurting cash flow and the wider economy, the twin ban on alcohol and cigarette sales and the government’s failure to provide a cogent explanation for pursuing both had created cynicism the country could ill afford.

“The government has on several occasions reassured that they are listening and consulting. But we see little evidence of this,” he said.

“We cannot afford decisions that are poorly made or poorly explained.

“I do not do this because the prohibitions hurt our sales and cashflow – although it is true that they do. I focus on it because – more than any other decision taken by the government during this pandemic – these prohibitions risk creating cynicism and division that we cannot afford.”

Ackerman said the explanations given by the government “have been confusing and contradictory”.

Like other critics of the four-month-old ban on cigarette sales and the renewed ban on alcohol trade, Ackerman pointed to the fact that both goods were trading briskly on the black market but without the usual steep taxes flowing to the revenue service.

“Whatever the reasoning put forward by government, it is inordinately outweighed by the cynicism that it has created,“ he said.

Ackerman commended Ramaphosa’s early handling of the Covid-19 health threat but said the government had lost it footing since then.

“What we saw was inspiring leadership from government in the early days of this pandemic, and we would hope to see a return to this very soon … We have to learn to live with the virus while we grow the economy, and for this to happen, the government will have to rely more on persuasion and co-operation, and less on control,” he said.

In a separate statement, the company said the safety measures such as limiting the number of customers in a store, the temporary closures of stores after staff were infected, and the restrictions on categories of goods had impacted on its financial performance.

It said those items banned during the initial five-week long total shutdown imposed from March 27 — including alcohol, tobacco, clothing, general merchandise and hot foods — make up about 20 percent of the company’s revenue because they carry higher profit margins.

Pick n Pay decided in May to defer its annual dividend to shareholders. Ackerman said the company would review this decision later in the year when it had more clarity on its cash flow.

His attack on the alcohol and tobacco bans comes a day after Distell warned that 800 small scale brewers faced bankruptcy and South African Breweries cancelled investment worth R5 billlion ($288.7 million) as a result of revenue losses.

The government says the prohibition is intended to spare South Africa’s health services from being overwhelmed by alcohol-related trauma cases and smokers with severe Covid-19 symptoms.

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