Proposed amendments to the National Liquor Act Regulations

The national Minister of Trade, Industry and Competition has published proposed amendments to the regulations under the national Liquor Act for public comment.

This Act regulates the activities of large-scale manufacturers of liquor and distributors which sell liquor to businesses with retail liquor licenses i.e. liquor stores, supermarkets, restaurants, hotels, etc.

Some of the proposed amendments appear to be aimed at stricter control over certain activities by manufacturers and distributors.

The proposed changes include the addition of a definition for the “delivery” of liquor. This is probably aimed at imposing restrictions regarding delivery, while the Act only empowers the minister to regulate the manufacture and the sale of liquor.

It also includes the introduction of fees in respect of the storage of liquor, in addition to the application fees and annual renewal fees which apply to the manufacture and distribution of liquor.

This proposed change is not in line with the provisions of the Act, which does not require obtaining a separate approval for the storage of liquor or fees in respect thereof.

The regulations also propose requirements in respect of the zoning/land use of properties on which premises are located. A business applying for a registration must provide a zoning certificate that confirms that the premises are suitable for the manufacture or distribution of liquor or a letter from the municipality confirming the suitability, if such a certificate cannot be provided.

This proposal fails to recognise the fact that a significant portion of liquor sales to the trade is conducted by way of e-commerce, and the fact that it is possible to distribute liquor without storing it.

It is a common practice for businesses which sell liquor online to members of the public to arrange for the liquor to be transported directly from the online retailer’s supplier to the customer, without the need for the online retailer to store the liquor.  For these businesses, the licensed premises are simply the office where the administration relating to the transaction is conducted.  This model has been recognised and accepted by provincial Liquor Authorities.

Unfortunately, businesses which seek to use the same model to sell liquor to the trade are restricted by the fact that the National Liquor Authority requires that the premises to be registered have zoning which permits the warehousing and storage of liquor, irrespective of whether it is the intention to actually store liquor.

This current restriction is a significant barrier to entry for new entrants to the industry.

It is our intention to propose that the regulation in question be amended to simply state that the zoning of the property must be suitable for the activities which will actually be conducted on the premises.  This will enable a business to obtain a registration for an office if it does not intend to store liquor.

In terms of the proposed amendments, applications for new registrations must be accompanied by B-BBEE compliance certificates, in line with a B-BBEE Act.

This proposal is problematic since it is aimed at regulating requirements which are in fact regulated by a separate act.  It is also problematic since there are currently significant discrepancies between the requirements in the Liquor Act itself, the current regulations, conditions which applied to registrations when the Act came into operation and conditions imposed on registrations in the interim.  It is our intention to propose that these inconsistencies be addressed first before such a requirement is enforced.

The amendments confirm a restriction in terms of the hours in which liquor may be sold to the trade.  It ignores the fact that the commercial reality requires that businesses which manufacture and distribute liquor transport and deliver liquor to retail stores outside these hours to accommodate the distances to be covered and because it is more practical to deliver liquor at times when traffic is less.

We intend to recommend that the regulation stipulate that not only manufacturing but also the transport and delivery of liquor may take place at any time. In this regard, it must be remembered that the harmful consequences of liquor abuse can only occur when liquor sold to members of the public by a retailer is consumed by said person.  It cannot occur when a manufacturer or distributor delivers to such a retailer.

One of the new specific conditions proposed for registrants appears to restrict manufacturers and distributors from also storing liquor intended for sales to the public in the same facility

It is our intention to challenge this proposal since the Act does not empower the minister to impose restrictions regarding the retail sale of liquor. Commercial reality requires that businesses which sell liquor to both the trade and the public be permitted to store their liquor in the same facility.