South Africa’s liquor industry faces a cocktail of challenges

Picture: David Ritchie

Picture: David Ritchie

Published Oct 2, 2023


By Angela Russell

From the scourge of illicit and counterfeit brands, harmful, backyard-made alcohol, the seriousness of underage drinking, road fatalities caused by drunk driving and irresponsible trading, the country sits with a huge hangover.

But there is hope.

The liquor industry is a key contributor to the economy, creating over 500,000 jobs in the value chain and supporting over 1 million livelihoods. It contributes significantly to tax revenues, with a total of R72 billion, along with an additional R173 billion to the country's GDP.

This is significant in a country where unemployment is rampant. But unless we trade responsibly, the consequences are dire, not only for the industry, but also for the communities where we operate. This is really about balancing the scales – economics vs social impact.

Industry players are doing a lot to convey that responsible trading is good for business. Working together, we are better positioned to win the war against the misuse of alcohol, a complex challenge mixed in various social nuances beyond the bottle.

So, what are the best models, and what are the guiding principles for responsible trading?

As the Drinks Federation of South Africa, we are the custodians of the industry code of conduct, and we firmly believe that promoting responsible trading while endearing an ethos for social responsibility will help solve many of the societal problems caused by the misuse of alcohol.

We believe programmes aimed at enforcing responsible trading will make a difference. These programmes are beyond compliance but speak to responsible business practice.

In Tembisa, for example, in conjunction with the Gauteng Liquor Board, we will run a five-month pilot programme starting in September, where patrollers will visit hotspots to check compliance. Depending on its success, this programme may be extended to other areas as we up the ante on compliance.

The enforcement of liquor laws can’t be left to the government alone. We all must play a part.

A combination of self-regulation and co-regulation ensures we all drink from the same glass. Inevitably, those trading irresponsibly bring down the industry and those who do trade responsibly.

Underage drinking is a real problem and can be curbed if traders clearly display legal age of purchase notices on their outlets and, most importantly, enforce the conditions of their liquor licences to fight the issue of minors consuming alcohol, which is a global phenomenon.

Further, we must promote efforts to fight binge or excessive drinking at liquor establishments. Their staff must be trained to identify excessive alcohol consumption and refuse to sell alcohol to those who have had too much to drink.

Drinking and driving is also a major challenge, resulting in road fatalities, injuries, and damage to property. This can be mitigated by promoting the use of designated drivers among patrons, and where possible, helping them with safer transport options such as e-hailing services.

It’s the responsibility of traders to make sure that they create a safe environment that allows consumers to enjoy themselves and drink responsibly.

There should be serious consequences for those who break the law by putting profits before responsible and ethical business practices.

When you have a moral conscience, responsible trading becomes a habit and, quite frankly, should be the norm.

For example, a restaurant that has a licence for on-site consumption of wine and is a responsible trader, can’t allow a customer to leave the establishment with a half-empty bottle as they are not licensed to sell alcohol to take off the premises.

The industry is also reeling from counterfeit and illicit alcohol flooding the market since the Covid-19 lockdown that saw the government ban the sale of liquor.

A 2020 custom research report by SA Liquor Brand Owners Association (SALBA), Beer Association of South Africa (BASA) and VINPRO, found a sharp rise in illicit alcohol sales as a result of the lockdown ban as criminal syndicates took advantage of the situation to flood the market with counterfeit brands.

The report by Euromonitor found the illicit market posted an estimated 10% increase in volumes during 2017-2020, reaching 22% of the total market (licit and illicit), up from 14.5% in 2017.

The total licit market declined by 6.5% during same period.

“Trade sources indicated that the regulatory environment is relatively sufficient but lacks implementation. Law enforcement is often faced with a lack of resources to fully enforce regulations, especially against proactive syndicates. This is exacerbated by corruption and collusion among illicit operators," it said.

While the counterfeit and illicit market robs the country of much-needed revenue, there is also the safety element, as counterfeit products are not produced under strict manufacturing conditions with the correct quality controlled ingredients.

Enforcement of compliance remains a huge challenge across the board.

Take Gauteng, for example. There are only 26 inspectors to monitor and enforce compliance for approximately 35 000 licensed outlets. That’s about 1346 outlets per inspector. It is impossible for them to be everywhere.

Consider that there are thousands of illegal outlets to deal with as well. Research shows that for every licensed outlet, there are approximately three illegal ones.

What this says to us is that government alone cannot solve the challenge of irresponsible trading. We have to come together, traders, government and communities, to ensure compliance.

Responsible trading is necessary. It begins with all of us.

* Angela Russell is CEO of Drinks Federation of South Africa.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.