Govt. vs Alcohol: The Bizarre Booze Battle Brewing In South Africa

By  |  January 18, 2021

Saying “South Africa has a drinking problem” would be too much of a desperate attempt to begin this writeup with a double-entendre that slaps hard. However, it can be said that South Africa does have a problem with drinking; especially drinking in the middle of a pandemic.

All the nations of the world basically copied from the same playbook for much of the previous year. That was when entire nations took turns to go into full lockdown with a view to containing the spread of the COVID-19 virus.

But there is something rather distinct about the three versions of lockdown that South Africa has enforced since last year: An outright ban on alcohol sales.

Now, here’s a quick gulp of the bizarre booze battle brewing in South Africa between the State and the liquor industry.

The brewing booze brawl

Simply put, every time South Africa has gone into lockdown following a spike in COVID cases, alcoholic drinks have been forced to go into lockdown too.

In fact, at this moment, South Africa’s latest lockdown rules also place a ban on the sale of booze, much to the chagrin of liquor industry stakeholders, as expected.

Indeed, during the three periods when South Africa has gone into lockdown and enforced a ban on alcohol sales, South African Breweries (SAB) have cancelled up to ZAR 5 Bn (USD 329. 2 Mn) in capital investments in South Africa following the government’s ban on alcohol sales.

Obviously, cancelling such a significant capital outlay is sort of a message from liquor industry players to the authorities along the lines of: “We can’t pour our money into a system that chokes us, and we can’t even afford such an investment now that you have chosen to choke us.”

There are claims that South Africa’s liquor industry was losing ZAR 45 Mn (USD 2.96 Mn) a week during the first alcohol sales ban between late March and June last year. It’s been stated in many circles that the industry lost ZAR 18 Bn (USD 1.18 Bn) during this period.

But the government remains unfazed, determined to limit liquor sales, especially during the health emergency that is the pandemic. And this situation seems to be peculiar to South Africa for certain reasons.

Why ban alcohol? What’s it got to do with COVID?

A gist about hand sanitisers is probably the only time alcohol has some kind of business with COVID. Alcohol-based sanitisers became especially popular during the early days of the coronavirus when the whole world had to relearn handwashing.

And like everywhere else, the sale and distribution of that kind of sanitising “alcohol,” which is obviously unsuitable for ingestion, is encouraged in South Africa. It’s the sale and distribution of the other kind of alcohol — the booze kind — that is basically a crime, at least for now.

So why has South Africa chosen to clamp down on alcohol sales during the pandemic? Well, it turns out that the reasoning behind the move is: “we could really use one less thing to worry about.”

Apparently, there is an alcohol abuse issue in South Africa that often leads to disastrous occurrences that put medical facilities under strain.

Ordinarily, that sort of strain is not exactly an intractable problem under normal circumstances. But in the COVID era, hospitals are spread thin as they try to tackle the virus and it would really help to not have to deal with trauma incidents related to drunk driving and alcohol-induced violence. So, that’s basically the story.

In fact, on the first day of 2021, the Chris Hani Baragwanath Hospital in Soweto revealed that for the first time in its history, it has had no trauma case-patients coming through its doors on January 1.

The hospital posted photos of an eerily quiet trauma ward on its Facebook Page and it was quite the sobering revelation. This feat has generally been attributed to the alcohol ban, as well as the 9 pm curfew that President Cyril Ramaphosa had imposed.

Is the “alcohol abuse” issue that big a deal?

Apart from ensuring the safety and security of the lives and property of its citizens both home and abroad, a government has the mandate to put money in people’s pockets, or at least help them to.

The task of creating that kind of economic upliftment has a lot to do with creating the enabling environment for both public and private enterprises to thrive.

Ideally, it’s a self-fulfilling arrangement that should work such that money flows into government coffers as taxes/revenue from those public or private enterprises, and the government puts that money to use in creating an even more enabling environment and a better system.

An abridged version of the wordy explanation above is that the government needs institutions to make money so that the government can make money too.

The more money institutions can make, the more government can fork into its purse. So why then would the South African government effectively shut down an industry that was found to be employing approximately 90,000 people as of 2015?

South Africa has a vibrant liquor industry. It’s a major force in the South African economy, providing employment and income to thousands of households and making a substantial contribution to government tax revenue and export earnings for South Africa.

The Industry Association for Responsible Alcohol Use (ARA) reports that the liquor industry’s manufacturing operations and capital expenditure are responsible for an estimated ZAR 94.2 Bn (that’s USD 6.2 Bn or 4.4 percent) of South Africa’s gross domestic product (GDP).

In 2009, the economy-wide contribution to GDP of just one company (SAB) was about ZAR 66.2 Bn (USD 4.3 Bn), or 3.1 percent. During the 2009/10 financial year, the National Treasury received ZAR 10.2 Bn (USD 672 Mn) in tax revenue directly from SAB. This accounted for 1.7 percent of the government’s total tax revenues for the year.

Futher, the wine industry alone contributes ZAR 26.2 Bn (USD 1.7 Bn) to South Africa’s annual GDP. The total turnover of the wine industry in 2008 amounted to ZAR 19.2 Bn (USD 1.26 Bn).

On the whole, the South African liquor industry was valued at an estimated ZAR 96.5 Bn (USD 6.35 Bn) in the 2014/2015 financial year. It’s quite the money machinery.

So why shut it all down? Well, it turns out that keeping lives safe always comes first and humanity trumps capitalism.

The alcohol abuse that is endemic to South Africa has long been an issue and COVID gave the government a reason to rein it in. 

“In 2011, South African adults (aged 15 years and older) consumed 9.5  litres of absolute alcohol each — higher than the average for Africa (6.0  litres) and the world (6.2 litres),” says a study published in 2018 by Pamela J. Trangenstein, Neo K. Morojele, Carl Lombard, David H. Jernigan, and Charles D. H. Parry.

“In 2015, alcohol was the fifth leading cause of death and disability in South Africa, which is likely attributable to alcohol’s role in causing sexually transmitted infections and interpersonal violence, the two leading causes of death in South Africa,” it reads further.

And it appears the huge economic benefits that the liquor industry imparts into South Africa is somewhat offset by significant damages traced to alcohol.

“In addition, community-based samples repeatedly show an atypically high prevalence of fetal alcohol spectrum disorders, ranging up to 29 percent. Altogether, alcohol caused 7.1 percent of all deaths and 7.0 percent of all disability-adjusted life years in South Africa in 2000, and harmful alcohol use is estimated to cost ZAR 249–280 Bn each year, 10–12 percent of South Africa’s gross domestic product,” reads a portion of the study.

The State vs Booze

Beyond the duration of the adjustments forced by the pandemic, the South African government is looking at increased taxes, curbed trading hours, stricter advertising regulations, and a higher drinking age limit as legislative measures government being considered to tackle alcohol abuse in South Africa.

“The temporary restrictions that were placed on the availability of alcohol under the state of disaster regulations have demonstrated the extent to which abuse of alcohol fuels violence, trauma, and reckless behaviour, and places a burden on our health system and emergency services,” stated President Ramaphosa during an interview with The Sunday Times.

“We must take measures to reduce the abuse of alcohol through a combination of legislative and other measures and community mobilisation,” he added.

This would suggest stricter controls on alcohol sales post-pandemic. But the liquor sellers are not taking this lightly.

Initially, the SAB responded to the government’s latest alcohol sales ban by bankrolling influencers, celebrities, and important figures on social media to push for a revolt through quoting the alleged number of job losses and the financial impact of the alcohol ban. But this blackmail-type move didn’t go as planned.

”It backfired terribly because the SAB didn’t gauge the country’s mood. Instead of winning over the public, it appeared crass and inconsiderate at a time when everyone is trying to pull together to curb the spread of Covid-19 in the middle of a devastating second wave,” reads a commentary on New Frame.

Like many others, the liquor industry has been crippled by the pandemic and the lockdown it yielded. Livelihoods have been crushed and many jobs have been lost. But many South Africans see the ban as an important measure in terms of easing the burden on the healthcare system.

On the other side of the table, the view is different.

“While SAB supports all reasonable and responsible measures that curb the spread of the pandemic and save lives, including an earlier curfew to limit movement, reduced indoor and outdoor capacity at gatherings, heightened law enforcement, we strongly disagree with the introduction of yet another outright ban on the sale of alcohol, ” said SAB’s Vice-President of Finance Richard Rivett-Carnac, after the latest ban.

It is also understood that SAB plans to challenge the constitutionality of South Africa’s latest alcohol sales ban in court, making for an interesting booze battle.

Featured Image Courtesy: WDRfree

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