PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE

PRESENTATION TOTHE SPORTS & RECREATION PORTFOLIO

COMMITTEE

Room M 315, Marks Building, Parliament, CAPE TOWNTuesday, October 29, 2013

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE

Thank you for the invitation to share our views on the proposed alcohol advertising

ban. We acknowledge that this is not official consultation of the liquor industry on the

proposed Bill;

We wish to demonstrate our commitment in fighting against alcohol abuse in South

Africa;

We will share our perspective of the impact of an alcohol advertising ban;

We will also respectfully propose alternative policy options that can be considered to

address alcohol abuse in South Africa given our country’s very specific issues;

We also wish to solicit insight from the Portfolio Committee on its expectations from

industry over and beyond current initiatives on curbing harm

Opening remarks

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE About ARA

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE About ARA

Associate Members:In addition, a number of distributors and some retail chains such as Tops, Makro and Diamond Liquors have now joined

the ARA as associate members. There are currently more

than 120 associate members and the ARA continues to receive enquiries from other interested parties.

OUR PURPOSE:To promote a culture of responsible alcohol use in South Africa

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Alcohol and advertising

No single player can solve this alcohol abuse. Only partnerships will work. There are the lessons learnt from other social issues such as HIV/AIDS and crime;

No scientific research has discovered a silver bullet in addressing alcohol abuse;

Majority (65%) of South Africans do not consume alcohol and of those who consume only 8% abuse the product. This 8% who abuse alcohol, causes damage to themselves and to society. Targeted interventions are therefore required to address this community of irresponsible alcohol users;

Hard drugs in SA are pervasive, but these are not advertised anywhere. Consequently, we need to ask whether an alcohol advertising ban will address alcohol abuse in South Africa;

Benefits of an advertising ban are at best dubious – and the social costs are unmistakable

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Impact on competition, transformation and SMEE development

Competition

• The liquor industry has barriers to entry to the market which are quite high. To

promote a highly competitive environment, one should be able to grow your

brand through ad-spend

Transformation

• With high barriers to entry, a ban on alcohol advertising will inhibit

transformation in the liquor industry further, as it would hamper small BEE

players to advertise their products and break into the market through marketing

and advertising.

SMME development

• Smaller companies would be forced to continue operating in a compressed profit

margin environment, with little or no prospect to generate volume growth. New

entrants and emerging brands would find it almost impossible to compete or try

to enter the industry, increasing the barriers to entry even more. This would

effectively strangle smaller companies with limited brand recognition

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Liquor industry’s contribution to the SA economy

including multiplier effects (in 2009), the liquor industry:

sustained production of R333bn throughout the economy;

added R94.2bn (or 4.4%) to GDP;

supported more than 548 000 jobs throughout the economy;

for every R1.00 in sales generated, R2.08 is added to the country’s GDP

for each job offered by the liquor industry and its direct suppliers, 6.3

additional jobs are supported in the rest of the economy (formal and informal);

majority of positions are for unskilled workers;

around 88% of employees in the industry and its direct suppliers are from previously disadvantaged backgrounds.

The liquor industry has particularly high spin-off effects on employment

Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Liquor industry’s contribution to the SA economy


Description Direct impact Economy wide impact (direct+ indirect + induced)

Intermediate output (as user prices)

Rand billion 115.5 332.7

Employment

Number, including informal sector 87,312 547,917

Share of total employment in SA 0.7% 4.5%

Government tax revenue


Share of total tax revenue in SA 3.1% 6.7%

Value added (GDP) at factor cost


Share of total SA GDP 1.0% 4.4%

Multipliers

Employment multiplier 6.3

GDP multiplier 2.1


SA adult per capita alcohol consumption (APC) in 2005 = 9.5 litres of pure alcohol.

• 26.3% was homemade and illegally produced alcohol;

• APC in South Africa is above world average of 6.13;

• regional average for Africa of 6.2;

• below the European regions’ APC of 12.2;

SA’s recorded per capita consumption showed an increasing trend until the mid-1990s, but… over last decade per capita demand for liquor has been

shrinking;

SA is considered to be a medium consumption country in terms of per capita adult alcohol consumption.

• However, findings from national surveys show that those who do drink appear to do so at “binging” levels.

Alcohol demand or consumption patterns in SA



65% of population has never consumed alcohol

• This is among the highest abstention rates in the world;

• 7.7% have not consumed alcohol during the past year;

• Almost ¾ of the population have abstained from drinking alcohol in past 12 months.

Of the 35% of the population that do consume alcohol, only small percentage

consume branded products; largest percentage consume home-brews/

illegal alcohol.

• There are 50,000 - 60,000 licenced/legal outlets for alcohol sales and distribution and an estimated 120,000 unlicensed outlets;

• Generally accepted that alcohol abuse problem lies within this unlicensed

sector, which is not regulated at all by Government;

• Amount of taxes lost through illegal sector is estimated to be in region of R16bn





small population that drinks, does so

excessively – i.e. heavy episode

drinking

illegal alcohol

sector

high levels of

youth drinking

Main problem areas that exist around alcohol consumption in South Africa are:



Prevalence of FAS among Grade 1 studentsPrevalence of FAS among Grade 1 students

2

75

103

19

71

0

50

100

150

W. Cape

(Wellington) Gauteng N. Cape

(De Aar)N. Cape

(Upington) Worldwide

# per 1,000 students

Sources: ‘A review of policy-relevant strategies and interventions to address the burden of alcohol on individuals and society in South Africa’, Charles Parry, 2005; ‘More action needed on alcohol abuse’, Charles Parry, 2006; ‘Alcohol Use in South Africa FactSheet’, Medical Research Council; “A Strategy for a Safe SA, “April 2008; ‘Creating a sober South Africa’, Charles Parry, 2005; WHO Global Status Report on Alcohol 2004; National Drug Master Plan 2006–2011; “Estimating the Burden of Disease Attributable to Alcohol Use in South Africa in 2000,” M. Schneider et al.

Percent of reported incidents where victim or offender are under the influence of alcohol

Percent of reported incidents where victim or offender are under the influence of alcohol

Motor Vehicle AccidentsMotor Vehicle Accidents

21

5751

61210

0

30

60

90

Both Males Females

South Africa

World

-80%% PAFs

23

50

17

47

0

10

20

30

40

50

Victims Offenders

Rape

Murder

Percentage of Youth who Have Tried AlcoholPercentage of Youth who Have Tried Alcohol

% of youth

4156

89

61

2919

3944

73

3628

50

50

100

India Ghana Mexico Brazil SA Ireland

Males

Females

Alcohol harm in SA - our issues are specific


ISSUE DRIVERS INDUSTRY POSITION AND APPROACH RESULTS

Drunk Driving • Drivers not aware they are drunk;

• Feeling more confident after drinking and believe they are capable of driving even though they are not;

• Feel like they can get away with it;

• Unable to make safe, responsible decisions and deal with complex problems;

• Social and environmental influences

• Drunk driving is a major concern for the industry;

• SA has one of the most progressive traffic laws;

• Increase police presence AND enforce existing traffic laws;

• Lowered BAC levels;

• Restrictions on young drivers;

• Peer counsellor education and training through SADD;

• Alcohol Evidence Centres (AEC)

• 206 DUI offenders have been through the Panel Programme to date;

• 274 peer counsellors have been trained through the SADD programme for 2013

Addressing Drunken Driving


ISSUE DRIVERS INDUSTRY POSITION AND APPROACH

Binge Drinking • It is seen as fun;

• They want to socialise and feel

more self confident;

• They what to assert their

dominance or macho image;

• To forget about their problems;

• Peer pressure;

• They are curios;

• They want to rebel

• We will work to create an environment through our marketing and sales

where alcohol consumption is depicted in socially responsible settings

and quantities

• Information is provided to consumers about alcohol is accurate and

balanced, and we will take steps to engage stakeholders to prevent

irresponsible consumption

• The Industry’s Code on Commercial Communication, inter alia, prohibits

communication that features or encourages irresponsible, risky or

excessive drinking. It further prohibits the portrayal of persons in a state

of intoxication or in any way that intoxication is acceptable

• The website www.talkingalcohol.com provides consumers with

information about the risks of alcohol consumption

• The ‘Responsible Trader Programme’ educates traders on the facts and

impact of alcohol abuse and provides skills to retailers to help them avoid

alcohol abuse in their outlets (e.g. by not selling to intoxicated customers)

Addressing Binge Drinking



Underage Drinking

• To rebel

• To look good

• To escape

• To fight boredom

• Peer pressure

• No sense of hope

• Genetics

• Personality

• Characteristics and psychiatric co-morbidity

• Environment

• Transition

• Curiosity

• Wanting more freedom

• Stress

• Hereditary factors

• Risk taking

• People under the legal drinking age should not drink alcohol

• Laws preventing access to alcohol by underage people should be strictly enforced

• We support efforts to raise awareness amongst parents, retailers and other adults about the risks of underage drinking and the importance of not providing alcohol to underage people

• We do not direct any of our commercial communications at people under the age of 18. This is self regulated through the use of our Code of Commercial Communications

Approach

• You Decide Programme

• Community mobilisation

• Education

• Future Leaders


• Use of Sporting heroes as Ambassadors

• Diversion programmes such as Sports

• Responsible Trader Programme


• Education

• 3% absolute drop in underage drinking and an 8% relative drop

Addressing Under Age Drinking



Foetal Alcohol Syndrome

The underlying social determinants of heavy alcohol consumption remain unchanged and include: poor socio-economic conditionssingle-parent familieslow levels of maternal educationconcomitant use of tobacco and other substances low religiositylack of alternative recreational opportunities

Strategies that focus on the group of dependent and hazardous drinkers who need support and help to reduce

or stop their drinking, and prevent the occurrence of FASD. Achieving better compliance with and enforcement of the guidelines for traders to not serve pregnant womenPrevention of foetal alcohol spectrum disorders through support of community empowerment programmes like the FARR Healthy Mother Healthy Baby Programme Commitment from the industry to market products in a responsible manner:

o not depict pregnant women in commercial communication

o do not suggest drinking during pregnancy is acceptable

o circulate responsibility messages which include awareness of the dangers of drinking during pregnancy.

Funding for FARR programmes is mainly provided by SAB, and some funding comes from the SA Wine Association.

FARR implemented the Healthy Mother Healthy Baby Project. This project in conjunction with all of the other projects has resulted in a 30%

decrease in the FASD prevalence rate in De Aar.

The programme has been expanded to Galeshewe and Roodepan, the 2 biggest residential areas in Kimberley

Addressing Foetal Alcohol Syndrome

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Advertising expenditure patterns

Purpose of advertising is primarily to increase brand awareness of companies and encourage consumers to buy their product.

Reinforce and confirm the correctness of choice amongst existing users so that they make a repeat purchase;

draw attention to product and any new products. ATL advertising expenditure on alcoholic beverages has increased over the past five years to R1.8bn in 2012

Alcohol ADspend has remained virtually at the 5.5% level as a share of total media advertising expenditure since 2010.

Beer manufacturers have been spending the majority on advertising, followed by spirits, ciders, AFBs and RTDs and wine manufacturers.

Alcoholic beverages - total above-the-line advertising

expenditure

Share of alcohol adspend in total ATL adspend

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Potential impact on the media

TV dominates overall alcoholic beverages ADSpend (73.5% of total, 2012), followed by radio (8.7%) and cinema

(6.3%);

SABC TV has by far the largest share in ATL alcoholic ADSpend (28.4%):

• Total ban will result in the SABC losing advertising income of R500m+ p.a;

• If one adds the potential loss of R26.5m from radio ADSpend income, then loss to SABC increases to

R541.7m;

DSTV will have 2nd largest loss in ADSpend income of ± R440m (2012), followed by eTV (R300m);

Cinema stands to lose potentially R114.5m and OOH companies stand to lose R76.3m in billboard income;

Commercial regional radio stations will loose R55.2m, and metropolitan commercial radio stations R44.6m;

Media owners SABC, Multichoice Africa, eTV, Times Media Ltd, Media 24 and Radmark were biggest recipients

of ATL advertising income from alcoholic beverages in 2012 will be mostly affected.Net loss in advertising expenditure & sponsorships

Net potential loss in ad vertising expenditure on alcoholic beverages due to ban

Local manufacturers -R2.81 billion

International manufacturers -R1.15 billion

Wholesale and retail traders -R99 million

Sponsorships -R322.5 million

Total -R4.386 billion


Total direct corporate sponsorship spend in SA has grown from R63 million in 1985 to over R4.3 billion

in 2011. Leverage spend has been estimated to total a further R2.5 billion, which implies a total

sponsorship industry capitalisation of approximately R7 billion.

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Sporting codes supported by the industry

The following list highlights some of the national sporting codes and programmes that would be directly affected by a potential loss of sponsorship funding from the alcohol industry:

1. Soccer: a) Bafana Bafana;

b) South African Football Association (SAFA);

c) Domestic Premier Soccer League;

d) Regional Soccer Development League;

e) Stadiums, especially those built for the 2010 Soccer World Cup, which may be at risk of turning into “white elephants”. Already these are under significant financial distress, the potential loss of sponsorship funds from the liquor industry would exacerbate this.

2. Rugby: a) Springboks

b) Tri-nations rugby tournament

c) Currie Cup and Super 15

d) Varsity Cup

3. Cricket a) Proteas Test Cricket

b) On-day Cricket team

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Sporting codes supported by the industry

4. Sports Development Programmes Domestic sports development benefits from sponsorship deals from the alcohol industry. The liquor industry’s sponsorships contribute approximately R40 million per annum to major sporting codes’ development programmes. A certain portion of the money is also allocated to development and filters through to the grassroots sports level.

5. Department of SportThe potential loss of sports sponsorship could result in increased reliance on governmental funding given the negative socio-economic ramifications of weakened developmental structures in the major sporting codes. This will induce strain on the Department of Sport if the financial loss from a potential loss of funding from the liquor industry is not replaced by another industry.

6. Other small/peripheral sporting codes The primary risk from a potential alcohol sponsorship ban on domestic sports development is likely to be concentrated on peripheral sporting codes benefiting from liquor industry funding support. While these may not carry the financial clout of the major sporting codes, given the relatively lower inherent return on sponsorship investment, there is a risk of total collapse in the structures within these peripheral sporting codes – an examples is:the Dusi and Fish River canoe marathonsJ&B Met (Horse racing)

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Economic impact of a ban

The potential ban will have an (unintended) impact on the rest of the economy through the advertising

broadcasting industry (especially television and commercials), sport sponsorships and advertising agencies;

It is estimated that the GDP could be reduced by 0.28%, or R7.4 billion (in 2011 prices). Employment could be

reduced by 11 954.

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Some of the stakeholder concerns about advertising

Volume and frequency of alcohol adverts: the actual quantity of adverts placed in various media, particularly television is of serious concern. The prevailing view is that the high volume of alcohol adverts on TV during family viewing times (between 18h00 - 21h00) should be curbed;

Content of alcohol adverts: the link and use of celebrities and/or successful individuals when advertising alcoholic products has unintended consequences as it creates an illusion for success. These adverts resonate more with the poor and the youth as they regard drinking alcohol as cool and that it could lead to business and/or social success or acceptance;

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Does advertising of alcoholic beverages influence consumption?

Literature on influence of advertising on alcohol consumption is lengthy & mostly contradicting.

• Balance of global evidence is contradictory & inconclusive;

• Does not support a direct causal relationship between overall alcohol marketing and aggregate consumption or

harmful drinking patterns (whether chronic or episodic)

Alcohol is a "mature" product category in that consumers are already aware of the product and its basic

characteristics

• Overall consumption is not affected significantly by advertising specific brands;

• Instead of increasing total consumption, the objective of advertisers in this mature market is to encourage consumers to switch to their brand and create brand loyalty;

• Effective advertisers gain market share at the expense of others, who lose market share. They do not focus on increasing the total market for the product

Majority of alcohol consumed worldwide is not advertised

• Insufficient evidence to support an association between advertising and levels or patterns of drinking;

• Determinants of individual behaviour are difficult to establish. Factors are numerous and their interrelation complex;

• Many scientific studies conclude that parental education, poverty, unemployment and peer pressure are much more influential.

There is no statistical relationship between per capita alcohol consumption and per capita

advertising expenditure on alcoholic beverages.

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Does advertising of alcoholic beverages influence consumption?

Chart 1: Relationship between alcoholic beverage

consumption and its advertising expenditure

Chart 2: Relationship between alcoholic beverage

consumption per capita and advertising expenditure per

capita


PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Will an ad ban be effective to reduce consumption/harmful use?

Virtually all scientific evidence demonstrates that alcohol bans have NO or little impact on

overall alcohol consumption;

Restrictive bans on alcohol advertising in many countries have not rendered the desired result, i.e. lowering adult per capita consumption;

There is more than sufficient inconsistency, as well as a strong body of research denying the

strength of any link, that it would be an incorrect policy decision to introduce a

comprehensive ban on alcohol advertising in SA,• Total ban likely to have limited impact on total real consumption and probably no impact on per capita

consumption;

Other policy measures that could be more effective (according to international research) are: • Health sector response;

• deter drinking and driving;

• reduce the availability of alcohol by restricting and/or regulating the sale of alcohol to the public; and

• reduce the affordability of alcohol through taxation and price.

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE Concluding remarks

Both government and industry agree that alcohol abuse is at unacceptable levels;

Virtually all scientific evidence demonstrates that alcohol bans have NO/little impact on overall alcohol consumption;

• Restrictive bans on alcohol advertising in many countries have not rendered the desired result, i.e. lowering adult per capita consumption.

• There is more than sufficient inconsistency, as well as a strong body of research denying strength of any link, that it would be an incorrect policy decision to introduce a comprehensive ban on alcohol advertising in SA

• Total ban is likely to have limited impact on total real consumption and probably no impact on per capita consumption.

Set of carefully targeted policies, restrictions, and laws covering a range of measures far wider than

advertising would be preferable, should be introduced and carefully regulated & monitored;

Status quo cannot remain, we will be remiss to ignore the strong voices from different constituencies

We are open to discuss and make concessions on addressing abuse

This is what we have done and there’s scope to do more – we won’t run ahead of government

Over and above the alcohol reduction harm programmes, we have implemented some initiatives such as the removal of billboard in highly impoverished areas but we cannot unilaterally implement these without engagement with Government


WHO

• With regard to the advertising of alcoholic beverages, it should be noted that the WHO

recommends the regulation (not necessarily banning) of advertising in their “Global Strategy to

Reduce the Harmful Use of Alcohol”;

Developing effective partnerships

• Governments, public health organisations, and the alcohol beverage industry agree that there is

much more to do in the fight against the irresponsible consumption of alcohol beverages. There is

much common ground among these various stakeholders that can form the basis of an effective

partnership.

Targeted interventions

• There is a need identify the particular individuals, populations, and settings in society where harmful

drinking patterns exist and focus exclusively on them, rather than on society at large. These

interventions can be tailored to individual, societal and cultural differences. By targeting those with

problematic drinking patterns, and understanding the factors leading to their inappropriate alcohol

consumption, alcohol abuse and its consequences can be significantly reduced.

Concluding remarks


Last updated: 21 April 2023

Thank You

PRESENTATION TO THE SPORTS & RECREATION PORTFOLIO COMMITTEE

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