South African Breweries calls for the sale of beer and other alcohol under these conditions

South Africa stands out as a worldwide anomaly by adopting a national ban on alcohol sales as a unique measure to combat the spread of Covid-19 and “flatten the curve”.

As history has taught us, banning of alcohol sales and distribution has unintended consequences, such as an increase in illicit liquor trades, says Hellen Ndlovu, director of regulatory & public policy at South African Breweries (SAB).

There is a fear that if we don’t learn from the USA prohibition of alcohol (1919 – 1933), these consequences may grow exponentially as the ban remains in place.

The sale and production of alcohol was prohibited in the United States between 1919 and 1933 – a historical event commonly known as “The Prohibition”. The US government thought this would discourage people from consuming alcohol, but they were very wrong.

What prohibition did do, was allow crime syndicates producing or smuggling booze to flourish, Ndlovu said.

South Africa is currently operating under level 4 lockdown regulations, which bans the sale and distribution of alcohol. That will change once the regulations are relaxed to level 3.

“The lessons learned from the US Prohibition are eerily relevant when we unpack the unintended consequences the ban on alcohol distribution and sales have had in our country over the last 5 weeks,” Ndlovu said.

There is a fear that these consequences may grow exponentially as the ban remains in place if we don’t learn from the prohibition of alcohol in the US.

Lessons learned:

Lesson 1 – Prohibition puts markets into the hands of criminals

Banning alcohol sales doesn’t suddenly remove demand. Banning alcohol simply hands the market to criminals.

“South Africa already has a fully functional illegal alcohol market. This illicit liquor trades over R13 billion a year and results in annual tax losses in excess of R6 billion.

“As has been widely reported, the ban has offered criminals an unparalleled opportunity to grow their illicit activities which will undoubtedly result in growing losses to both government and the legal alcohol sector,” Ndlovu said.

Lesson 2 – Prohibition changes people’s behaviour

By banning the legal sale of alcohol, ordinary law abiding citizens become criminals overnight and it changes how they consume alcohol, she said.

In the US, consumers switched to more potent drinks and illegal producers – Bootleggers – were incentivised to produce hard liquor rather than beer and wine. During Prohibition, the death rate from acute alcohol poisoning (due to overdose) was more than 30 times higher than it is today.

“In South Africa, spirits accounts for the largest share of illicit alcohol volumes, resulting from counterfeiting and substitution/refill activities. Illicit industrial manufacturing is mostly run by very sophisticated, organised criminal cartels concentrating on high-margin products,” Ndlovu said.

As South Africans change their drinking behaviour and demand increases for access to more potent alcohol, already existing illicit producers will seize this opportunity to grow their businesses and create a stronghold in the market.

“Another risk is the influx of a host of new illicit producers looking to make a quick buck, thereby introducing potentially hazardous substances which could endanger thousands of desperate consumers who normally wouldn’t have taken the risk of purchasing illicit alcohol,” she warned.

Lesson 3 – Prohibition diverts law enforcement resources

A law that few people agree with requires massive enforcement if government wants it to succeed, said Ndlovu.

In the first weeks of the lockdown, South African citizens generally accepted the ban of alcohol sales in light of the initial high levels of uncertainty and turmoil. As time passed, the acceptance and understanding of the purpose of a prolonged ban on alcohol, however faded fast.

“In South Africa, the growing illegal sales of all types of alcohol at exorbitant prices and the spike in looting of alcohol stores and storage facilities has been widely reported.

“An already strained and exhausted police force is now tasked to deal with additional problems, while the resulting legal battles to deal with these cases will further burden an already overloaded legal system,” said Ndlovu.

Lesson 4 – Prohibition almost never works

Despite the effort, prohibition failed to end alcohol consumption in the US.

“In fact, as we have seen from our own experience during our indefinite lockdown, telling someone they can’t have something, makes them want it even more. The question that requires careful consideration is however, at what cost will people pursue the forbidden fruit?”

Where to from here?

The regulatory position taken towards alcohol in South Africa has definitely been on the extreme end of the spectrum when compared to lockdown measures put in place by other countries – both on the continent and globally, said SAB.

In some countries where bans were instituted the governments quickly reversed them when it became clear that the unintended consequences were worse than the initial perceived threats. Naturally these consequences included spikes in illicit alcohol trade and deaths related to the consumption of unsafe illicit substances, Ndlovu said.

“If not addressed soon, the alarming rise in illicit trade, health emergencies and criminal incidents involving alcohol will become a crisis in its own right in South Africa.

“By implementing measured concessions now, our government can prevent this matter from becoming an ongoing drain on precious government time and resources in a time where the attention is much more needed elsewhere,” she said.

SAB called for a more measured approach to the sale of alcohol, including limiting the amount of alcohol that can be purchased, introducing online sales, trading hour restrictions for stores selling for personal consumption, and opening up sales of lower alcohol by volume (ABV) products only.

Sell beer to save jobs

The Beer Association of South Africa (BASA) representing the Craft Brewers Association, Heineken and South African Breweries recently called for the ‘off-consumption’ beer trade to resume.

The association made a number of submissions to president Cyril Ramaphosa with proposals as to how to ensure the survival of the industry.

Some of these include:

  • Allowing licensed off-consumption outlets to sell beer subject to strict social distancing requirements and within restricted hours of trade.
  • Allowing licensed on-consumption outlets to be granted a special dispensation to operate strictly as off-consumption outlets subject to the strict social distancing requirements and within restricted hours of trade.
    • This includes Licenced taverns to support the township economy
  • Restriction on volumes sold per consumer to avoid irresponsible consumption
  • Placing hand sanitizes at outlets to ensure good hygiene practices.
  • Allowing for online ordering and delivery of beer with strict quantity controls in place
  • Restricted Hours of Trade:
    • Between 09h00 – 18h00 on all weekdays;
    • Between 09h00 – 16h00 on Saturdays; and
    • No beer sales on Sundays and Public Holidays

“We believe our proposal balances both the need to mitigate health risks and preserving the stability of the legal beer industry and our business,” BASA said.

“As an association, we have made a commitment to work with SAPS and other law enforcement agencies to take swift action against any traders who do not comply with the regulations,” it said.

Read: South Africa can move to level 3 “rapidly”, says minister – which means more freedom, more work, and permission to buy alcohol

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South African Breweries calls for the sale of beer and other alcohol under these conditions