PRESENTATION TO
THE SPORTS & RECREATION PORTFOLIO
COMMITTEE
Room M 315, Marks Building, Parliament, CAPE TOWN
Tuesday, October 29, 2013
Opening remarks
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
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
About ARA
About ARA
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
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
Alcohol and advertising
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
 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
The liquor industry has particularly high spin-off effects on employment
 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.
Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013
Liquor industry’s contribution to the SA economy
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
Direct impact
Economy wide impact (direct+ indirect + induced)
115.5
332.7
Number, including informal sector
87,312
547,917
Share of total employment in SA
0.7%
4.5%
Rand billion
19.5
41.8
Share of total tax revenue in SA
3.1%
6.7%
Rand billion
22.5
94.2
Share of total SA GDP
1.0%
4.4%
Description
Intermediate output (as user prices)
Rand billion
Employment
Government tax revenue
Value added (GDP) at factor cost
Multipliers
Employment multiplier
6.3
GDP multiplier
2.1
Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
Alcohol demand or consumption patterns in SA
 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.
Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
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
Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
Alcohol demand or consumption patterns in SA
Main problem areas that exist around alcohol consumption in South Africa are:
small population that
drinks, does so
excessively – i.e.
heavy episode
drinking
illegal alcohol
high levels of
sector
youth drinking
Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013
Alcohol harm in SA - our issues are specific
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
Prevalence of FAS among Grade 1 students
150
Motor Vehicle Accidents
% PAFs
# per 1,000 students
100
South Africa
-80%
103
90
World
75
71
60
50
19
2
0
57
51
30
W. Cape
(Wellington)
Gauteng
N. Cape
(De Aar)
N. Cape
(Upington)
Worldwide
21
12
10
6
0
Both
Percent of reported incidents where victim or offender are under
the influence of alcohol
Males
Females
Percentage of Youth who Have Tried Alcohol
% of youth
50
50
Rape
47
100
Murder
40
30
19
17
20
29 28
Females
73
61
50
23
Males
89
56
36
44
41 39
5
10
0
India
0
Victims
Ghana
Mexico
Brazil
SA
Ireland
Offenders
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.
Addressing Drunken Driving
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
ISSUE
Drunk Driving
DRIVERS
INDUSTRY POSITION AND APPROACH
RESULTS
• Drivers not aware they are drunk;
• Drunk driving is a major concern
for the industry;
• 206 DUI offenders have
been through the Panel
Programme to date;
• 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;
• SA has one of the
progressive traffic laws;
most
• Increase police presence AND
enforce existing traffic laws;
• Unable to make safe, responsible
decisions and deal with complex
problems;
• Lowered BAC levels;
• Social
and
influences
• Peer counsellor education and
training through SADD;
environmental
• Restrictions on young drivers;
• Alcohol Evidence Centres (AEC)
• 274 peer counsellors have
been trained through the
SADD programme for 2013
Addressing Binge Drinking
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
ISSUE
Binge Drinking
DRIVERS
• It is seen as fun;
• They want to socialise and feel
more self confident;
• They what to assert their
dominance or macho image;
INDUSTRY POSITION AND APPROACH
• 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
• To forget about their problems;
• Peer pressure;
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
• They are curios;
• They want to rebel
• 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 Under Age Drinking
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
ISSUE
Underage
Drinking
DRIVERS
INDUSTRY POSITION AND APPROACH
• To rebel
• People under the legal drinking age should not drink alcohol
• To look good
• Laws preventing access to alcohol by underage people should be strictly
enforced
• To escape
• To fight boredom
• Peer pressure
• No sense of hope
• Genetics
• Personality
• Characteristics and
psychiatric co-morbidity
• 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
• Environment
• Community mobilisation
• Transition
• Education
• Curiosity
• Future Leaders
• Wanting more freedom
• Community mobilisation
• Stress
• Use of Sporting heroes as Ambassadors
• Hereditary factors
• Diversion programmes such as Sports
• Risk taking
• Responsible Trader Programme
• Community mobilisation
• Education
RESULTS
• 3% absolute drop in
underage drinking
and an 8% relative
drop
Addressing Foetal Alcohol Syndrome
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
ISSUE
Foetal Alcohol
Syndrome
DRIVERS
INDUSTRY POSITION AND APPROACH
The underlying social determinants of
heavy alcohol consumption remain
unchanged and include:
Strategies that focus on the group of
dependent and hazardous drinkers who need
support and help to reduce
 poor socio-economic conditions
or stop their drinking, and prevent the
occurrence of FASD.
 single-parent families
 concomitant use of tobacco and
other substances
 Achieving better compliance with and
enforcement of the guidelines for traders to
not serve pregnant women
 low religiosity
 Prevention of foetal alcohol spectrum
 low levels of maternal education
 lack of alternative recreational
opportunities
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.
RESULTS
 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
Advertising expenditure patterns
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE


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.
Alcoholic beverages - total above-the-line advertising
Share of alcohol adspend in total ATL adspend
expenditure

Beer manufacturers have been spending the majority on advertising, followed by spirits, ciders, AFBs and RTDs
and wine manufacturers.
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
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
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 Sport
The potential loss of sports sponsorship could result in increased reliance on governmental funding given the negative socioeconomic 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 marathons
 J&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
Chart 2: Relationship between alcoholic beverage
consumption and its advertising expenditure
consumption per capita and advertising expenditure per
capita
Source: Econometrix Economic Impact of an Advertising Ban on Alcoholic Beverages Study - June 2013
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
Concluding remarks
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
 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.
PRESENTATION TO THE SPORTS &
RECREATION PORTFOLIO COMMITTEE
Thank You
Last updated: 10 March 2016