A key component of SAB’s business is its logistics network and distribution capabilities. As a company committed to customer service, productivity and empowerment, SAB is one of only a few companies that can deliver its products to any area in South Africa within 24 hours of an order being placed.
(from SAB)The Owner-Driver programme was founded with the introduction of a pilot project in the Western Cape in 1987. Today, this project accounts for more than half of all SAB Ltd's deliveries through some 260 companies, operating more than 460 vehicles. Each of these businesses employs at least four people. As a result this R530-million per annum project has provided at least 2300 jobs and created 280 independent businesses.
(from Financial Mail)Using a network of 42 depots and 12 distributors, the company's products are distributed to about 25 000 points of sale across the country. More than half this distribution is done through independent distributors called owner-drivers.
It's estimated that there are 265 000 points of sale for beer in SA. Of these, SAB estimates that 74% are operating without a licence. Using Soweto as an example, SAB estimates that of 1 500 outlets, only 355 are licensed. Legally, SAB is prohibited from supplying these illegal outlets - shebeens - directly. To do so would be putting the company's licence to trade at risk.
To get beer to consumers in the townships, an entrepreneurial independent distribution network sprang up many years ago. SAB sells its products to legal retailers, and to a lesser extent to legal wholesalers, usually in rural areas. Wholesalers can sell to only licensed retail outlets. The independent retail distributors (IRDs) sell to shebeens. IRDs, or bootleggers, vary in size from one-man operations with a wheelbarrow to organised fleets of bakkies.
Who is ensuring that the owner drivers are playing by the rules and delivering only to licenced outlets? Apparently no one. Who is watching/stopping the illegal actions of the IRD's? No one. These folks are moving the bulk of SAB's product from the legal licenced sellers to the illegal and no one cares to do anything about it.SAB produces 93% of the country's alcohol (down from 98% in 2007).
74% of shebeens are unlicenced.
82% of SAB's alcohol sold in illegal shebeens if permit-operating shebeens are included. (Only 18% is sold legally)
SAB’s liquor is bought from licensed wholesalers such as Makro or Trading Centres and liquor stores by individuals who buy in bulk to illegally trade it in shebeens.
The owner-drivers are responsible for the delivery of the liquor to licensed and permit-operating businesses countrywide. This market consists of licensed restaurants, wholesalers, liquor stores, taverns and shebeens with permits. Wholesalers and liquor stores sell liquor in large quantities to individuals.
Some of these individuals operate illegal shebeens which actually retail 82% of SAB’s products. The Soweto depot supplies Soweto, Eldorado, Kliptown, Lolli and surrounding suburbs. These townships consume about 62 222 cases per day (twelve bottles in each case)
Licensed taverns and shebeens operating with permits are assisted by SAB to brand their enterprises, with names imprinted on the background of one of SAB’s alcohol beverages. For instance, SAB places a board outside each client’s enterprise, displaying the name of the shebeen or tavern on the background of one of SAB’s beers such as Carling Black Label or Castle Lager. These enterprises are also given fridges, chairs and other materials to facilitate their growth. By giving the taverners fridges, the quality of the product is assured and enhanced, as their liquor is served cold. The provision of chairs and glasses enhances the quality of the tavern or shebeen, as customers are able to enjoy their favourite beer sitting comfortably on chairs and drinking out of branded beer glasses. There are, however, conditions that come with SAB’s ‘free’ gifts. Taverners and shebeeners are told that the fridges are only to be used for SAB’s products. If any other company’s brand is found in the fridge, SAB will immediately confiscate the fridge. There are other rules attached to these fridges. They have to be packed according to a particular order. For example, a Black Label branded fridge should feature that beer on the top shelf, followed by other brands on the other shelves.
The shebeeners are assigned a sales representative by SAB, who teaches them how to pack the fridge and other business skills necessary for running a successful operation. The fridge has to be placed where customers can see the beers in the fridge. Thus, the fridge has to face the customer. These rules on how to display and pack the fridge have to do with the power of advertising.
The price of beer is recommended by South African Breweries. For instance, at the time of writing SAB’s recommended price for Black Label was R6.50. The taverners and shebeeners are not forced to sell the brand at this price. Most charge R7.00 to R7.50. SAB has created incentives for adopting the recommended beer prices and other recommendations drafted especially for taverns and shebeens. For instance, the provision of chairs, tablecloths and glasses is dependent on following SAB’s recommendations, including selling beer at the recommended price.
(Making Visible the Invisible research for the Dept of Labour)The government knows that the wholesalers are selling alcohol for illegal resale. SAB are providing a sales representative, training, the fridges, the tables, the chairs, the table cloths, the signage out the front, the glasses and the beer. Any wonder that there are 200000 illegal shebeens across the country? Is anyone watching? Does anyone care?
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