Little to cheer in government’s plan to ban alcohol advertising

Government’s plan to ban alcohol advertising, sponsorship and promotion is back in the news this week, with consultancy Econometrix reporting it will cost the economy almost 12 000 jobs and cut R7.4bn from South Africa’s gross domestic product (GDP).

Health Minister Aaron Motsoaledi’s campaign against alcohol advertising campaigns is designed to quell alcohol abuse, but Econometrix points out that many scientific studies have concluded that parental education, poverty and unemployment are much more influential than advertising in driving alcohol-related social problems.

Econometrix MD and senior economist Rob Jeffery said there was “no statistical link” between the advertising and consumption of alcohol. Banning advertising completely often had unintended consequences, including leading to more binge drinking in some countries, he said.

The liquor industry includes the agriculture, manufacturing, marketing, distribution and retail sectors and Dr Motsoaledi’s calls come as South Africa battles high unemployment and tepid growth.

The ban would cost the SABC more than R542m a year and DStv about R440m. In addition to this, sports bodies, sportsmen and sportswomen, sport development and stadium owners will all lose income, and stations may not be able to raise the sponsorship required to broadcast all codes, meaning viewers will lose too.

No certainty

A new draft of last year’s Control of the Marketing of Alcoholic Beverages Bill is currently crawling through the system.

Health Minister Aaron Motsoaledi, vocal in his opposition to alcohol advertising, promised in April to present the draft legislation to parliament within a week. But the bill has not been published, leaving the alcohol industry in a state of uncertainty.

Adrian Botha, director of the Industry Association for Responsible Alcohol Use, said alcoholic beverage producers were waiting for the new bill to surface to see if the Department of Health was still intent on imposing an outright ban on alcohol advertising.

“We don’t know where in the process they are now,” said Botha.

Health Department spokesman Joe Maila has only said that the bill was “still within government processes”.

While waiting to be told about what was on the legislative table, the Industry Association for Responsible Alcohol Use commissioned Econometrix to research the effects of an advertising ban.

The Times reported in April that:

• 130 people die every day in South Africa because of alcohol abuse. Causes of deaths include road accidents, liver disease, cancer and HIV (because alcohol use leads to risky sexual behaviour); and
• The World Health Organisation estimates that lifestyle diseases will become the biggest killer and health expense by 2020 worldwide.

An ad ban will grow the illegal, unbranded liquor sector

Most alcohol abuse takes place in the illegal and unbranded liquor sector, said Jeffrey.

According to the WHO, more than a quarter of all alcohol consumed in South Africa is “unrecorded”, that is, produced, distributed and sold outside formal, regulated channels.

This part of the sector would grow if an advertising ban went through, said Jeffrey, and the ban would cost the government much-needed tax revenue.

Jeffrey said a total ban on advertising, sponsorships and the promotion of alcohol use, as proposed by the Health Department, would probably reduce above-the-line advertising expenditure and sponsorships to almost zero but increase below-the-line expenditure and promotions.

Below-the-line expenditure could include indirect commercials and the use of social media.

Time to party

Themed parties, give-aways, and other promotions could become more common, as they did in the wake of the ban on tobacco advertising.

“From an economic point of view, it is bad to ban advertising. It curbs competition because a new guy won’t be able to enter the market. Eventually it will result in higher prices,” Jeffrey said.

Brand expert Jeremy Sampson said the government should be focusing on creating jobs, rather than “tinkering with alcohol advertising”. “The government has its priorities all wrong; it’s absolutely cockeyed the way they’re trying to do things.

“They shouldn’t be creating new rules, they should be enforcing the ones that are in place.

“Also, if you have a strong brand and you stop advertising it actually entrenches the position and precludes new brands coming into the market,” he said.

SA Breweries executive chairman Norman Adami said that because the bill had not yet been implemented, its effect could not yet be quantified.

The spokesman for beverage company Brandhouse, Sibani Mngadi, said spending on advertising was the only way to get into a market largely controlled by the behemoth brewer SABMiller.

“We wouldn’t have been able to grow our market share if we didn’t have access to advertising,” he said.

In an attempt to reduce lifestyle diseases, Motsoaledi has signed into law regulations to reduce salt in bread – by 2017 – and has banned trans fats from food.

Sources: Business Day, The Times