In his recent budget speech, finance minister Enoch Godongwana missed another opportunity to put the brakes on binge drinking and save the country billions of rand each year. Heavy drinking can be reduced by introducing stronger regulations and the right pricing instruments.
Even though less than a third of South Africans consume alcohol, we are a nation of heavy drinkers. This is because more than half of those who drink are binge drinkers, defined as having more than five standard drinks in one sitting.
As a consequence, our country has the fifth highest alcohol consumption rate in the world. Heavy episodic drinking poses a serious threat to our health, society and economy, together costing us an estimated R277bn per year, according to research conducted in 2014. Adjusted for inflation, this amounts to a potential drag of R433bn on the SA fiscus. Studies also show that one in 10 deaths nationally can be directly attributed to alcoholism, and we have the highest reported prevalence of foetal alcohol syndrome (FAS) in the world.
The main driver of binge drinking is the availability of cheap alcohol and studies have proven that regulating the cost and availability of liquor will reduce consumption. Against this backdrop, finance minister Enoch Godongwana missed another opportunity to announce measures to reduce binge drinking (and its subsequent economic and social costs) when he delivered his national budget speech on February 22, because alcohol remains cheap in SA by international standards and patterns of excessive alcohol consumption are underpinned by this affordability.
Studies show that one in 10 deaths nationally can be directly attributed to alcoholism, and [SA has] the highest reported prevalence of foetal alcohol syndrome (FAS) in the world.
A long-standing strategy to reduce the negative impact of alcohol without harming the economy is to increase taxes on boozy beverages through excise tax — a duty imposed on items that have negative public health effects, thereby deterring heavy drinking.
Commonly known as sin taxes, these annual increases on alcoholic beverages, often above inflation, have been a budgetary fixture for almost three decades after first being introduced by then-minister Trevor Manuel in 1996. This year’s budget was no different with the announcement of an increase in the excise duties on alcohol and tobacco of 4.9%, in line with expected inflation.
The impact of this increase is marginal on the price of alcohol; a 340ml can of beer increases by 10c, a 750ml bottle of wine increases by 18c and a 750ml bottle of spirits increases by R3.90, and comparatively SA still has some of the cheapest alcohol in the world. In a 2018 study undertaken across 50 global cities by Deutsche Bank, Johannesburg and Cape Town featured among the five cities with the cheapest beer available.
A step further
So, while excise taxes have a place, they have not been targeted enough to affect the heavy drinking culture in SA. To effect real change, Godongwana must go a step further by introducing minimum unit pricing (MUP), a regulatory mechanism that sets a base price at which a standard unit of pure alcohol can be sold. For example, if a 500ml bottle of wine has 75ml (15%) of pure alcohol, and the minimum unit price is R8 per 12ml (the standard alcohol unit in SA), the lowest price a retailer can sell the 500ml bottle for would be R50. This is before tax and other mark-ups. This would increase the price of cheap alcohol significantly and has proven effective in reducing harmful alcohol consumption internationally.
Considering the benefits of implementing an MUP policy, it would be remiss of government to overlook it as a pivotal part of broader reforms to SA’s alcohol legislation framework. International proof of the policy’s success has been well documented in Russia — a country plagued by binge drinking. After implementing MUP, specifically on vodka, as a mechanism to improve life expectancy and mortality rates, that country saw a decline in alcohol-related injuries and premature mortality over a 10-year period of consistent price increases.
While we have not yet fully tested MUP in SA, initial studies are encouraging. It works in tandem with excise taxes to reduce the burden of alcohol-related harm on the state. Modelling research carried out by University of Cape Town (UCT) professors Corné van Walbeek and Grieve Chelwa, in partnership with the DG Murray Trust, shows that heavy drinkers are more likely to decrease their levels of consumption as the price of alcohol increases. They estimate that, for example, a R6 per standard drink MUP could result in alcohol consumption decreasing by 6.2% among binge drinkers, by 15.5% among other heavy drinkers and by 4.6% among moderate drinkers.
If we are truly committed to reducing alcohol-related harm and leveraging the right pricing instruments to do so, we must think beyond the scope of excise taxes. However, regulating prices is not a silver bullet; it works most effectively in a legislative environment that limits the availability of alcohol, bans advertising and provides efficient counselling and treatment services.
• The authors represent the DG Murray Trust’s Alcohol Harms Reduction Campaign, a programme that seeks to prevent the societal trauma caused by heavy drinking.
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