SA's latest alcohol ban will again boost illicit liquor trade

SA’s latest alcohol ban will again boost illicit liquor trade
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Industry groups are warning that the South African government's latest clampdown on alcohol sales, announced last night for 14 days,  could again boost illicit trade.

Industry groups are warning that the South African government's latest clampdown on alcohol sales, announced last night for 14 days,  could again boost illicit trade.

The South African Liquor Brand owners Association (Salba) noted that South Africa has lost sales revenue estimated at around R36.3bn as a result of three liquor bans imposed since March 2020.

Salba cited Euromonitor International figures from May 2021, which found that the country’s illicit alcohol trade has grown at a compound annual growth rate (CAGR) of 17% since 2017 and now stands at 12% of the R177.2bn total industry market value and 22% of the market by volume, worth R20.5bn.

Salba also highlighted reduced tax and sales revenue for the South African Revenue Service, which lost R11.3bn in 2020 due to illegal alcohol trade.

And this brings us to the point made repeatedly over the past year: prohibition doesn't work. It punishes law-abiding citizens and turns them into criminals. By banning alcohol, the demand doesn't suddenly disappear - it just changes hands from a legal to  illegal trade. 

South Africa already has a well-embedded illegal alcohol trade worth in the region of R13bn annually, resulting in tax losses of more than R6bn. The latest ban feeds straight into this criminal element's networks, as they are once again offered an opportunity to extend their illicit activities.

In an on-line article on The SpiritsBusiness, Salba is reported to noting that, the move ‘will place jobs at risk at a time when the government does not have the fiscal resources to provide support for those workers who find themselves unemployed’.

The trade association said the country’s three bans on alcohol has put at least 200,200 jobs supported by the alcohol value chain at risk, equivalent to 1.22% of national jobs.

Sales revenue lost as a result of the bans was around R36.3bn rand (US$2.5bn), Salba noted.

South African President Ramaphosa last night announced that all gatherings, indoors and outdoors, are prohibited for a fortnight, along with the sale of alcohol.

South African Liquor Brand owners Association (Salba) chairperson, Sibani Mngadi, said the group is “deeply disturbed” by Ramaphosa’s decision to ban alcohol as “there is no evidence to suggest alcohol consumption is the driver of the current rise in infection rates”. He added that Salba ‘strongly questions the government to explain its decision to enforce a complete ban on alcohol’.

Salba noted that it ‘has always contested the assertion that alcohol consumption drives up infection rates, particularly when home consumption purchases have no greater risk than grocery shopping’. The trade group is calling on the government to reassess its response to the pandemic by introducing more effective measures such as "generating greater efficiency in the country’s vaccine rollout to allow for the economy to open up.

“The ban is being implemented without any consideration of any form of economic relief for businesses and employees of the industries that are being now restricted. It is an unfortunate situation in the context of a large amount of resources allegedly lost through corrupt relief claims.”

In his televised announcement last night Rampahosa said: “Our ministerial advisory committee has advised that the limited restrictions previously imposed were not that effective and that a prohibition will ease the pressure that is placed on hospital services by alcohol-related emergency incidents.”

Dining in restaurants is also banned ‘because it is not possible for patrons to wear masks while eating or drinking’. On-trade venues are only allowed to sell food for takeaway or delivery.

Furthermore, a curfew will be in place from 9pm to 4am and all non-essential establishments must close by 8pm.

The government will assess the impact of the restrictions after 14 days.

South Africa introduced a total ban on alcohol sales at the start of the pandemic in March 2020 which was lifted on 1 June but brought back twelve days later. The ban was reversed a second time on 17 August, with a third ban put in place in December and only lifted again  in February 2021.

Read more about the devastating effects of the alcohol bans on the industry since March 2020.

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