The South African Liquor Industry: Our Contribution
The South African Liquor Industry:our contribution
Who says one moredrink won’t hurt?
The Industry Association for Responsible Alcohol Use (ARA) was established in 1989 by the majormanufacturers of alcohol beverages in South Africa to reduce alcohol-related harm throughcombating the misuse and abuse of alcohol and promoting only its responsible use. The ARA isregistered as a non-profit organisation with the Department of Social Development.The Association’s members include the major manufacturers of alcohol beverages in South Africa,such as SAB, Distell, brandhouse, KWV, Pernod-Ricard and DGB. Four thousand wine producers and60 cellars are also members of the ARA and more than 180 distributors and retail chains such asTops, Makro and Diamond Liquors are associate members.The ARA acknowledges that the industry has a responsibility to make every effort to reduce alcoholrelated harm and since its establishment, its initiatives in this regard have had three focus areas – Effective self-regulation by member companies and other alcohol beverage manufacturers,distributors and retailers. Partnerships with government, public health bodies and other relevant stakeholders to combatabuse. Education - on the nature and risks of alcohol abuse, and on the responsible use of alcoholicbeverages by those not at risk who have made the decision to drink alcoholic beverages.The ARA recognises that harsh social and economic living conditionscontribute to alcohol abuse and agrees with the World Health Organisationthat in order to reduce alcohol-related harm, it is crucial to address socialdeprivation. This is a major focus of the liquor industry in South Africa.In this publication, we look at the liquor industry’s role in the promotion of responsible alcoholconsumption, its contribution to the South African economy and how it has assisted in the realisationof Government’s policy objectives and priorities.1
Contributing to the economy of South AfricaThe South African liquor industry is a major force in the South African economy,providing employment and income to thousands of households and making a substantialcontribution to government tax revenue and export earnings for South Africa.The liquor industry’s manufacturing operations and capitalexpenditure are responsible for an estimated R94.2 billion(or 4.4%) of South Africa’s gross domestic product. Theindustry’s GDP multiplier is estimated at 2.08 – whichmeans that for every R1.00 in sales revenue generated bythe liquor industry, R2.08 is added to the country’s GDP.In 2009, the economy-wide contribution to GDP of just onecompany (SAB) was about R66.2 billion, or 3.1 percent.During the 2009/10 financial year, the National Treasuryreceived R10.2 billion in tax revenue directly from SABin the form of corporate taxes, from its employeesthrough personal income tax and from consumers ofSAB beverages through VAT and excise duties. Thisaccounted for 1.7% of the government’s total taxrevenues for the year.The wine industry alone contributes R26.2 billion toSouth Africa’s annual GDP. Of that, about R14.2 billion(about 54%) remained in the Western Cape. Accordingto SA Wine Industry Information and Systems (SAWIS),if indirect and induced impacts are included, the wineindustry supported just over 275,000 jobs in 2009, most ofthem in the trade, catering, accommodation and transportsectors. Due to its labour-intensive production methods,the wine cellars and wine manufacturing industry directlyemployed around 16,000 workers, with roughly 15,000 ofthose jobs located in the Western Cape.The total turnover of the wine industry in 2008 amountedto R19.2 billion. Of this amount, R6.3 billion was exporteddirectly. Another R4.3 billion was generated indirectlythrough wine tourism.Key statistics for the South African liquor industry (2009)Value of domestic liquor sales in 2008/09Contribution of malt beer to total liquor salesExcise duties paid by the liquor industry during the 2009/10 financial yearLiquor industry’s share in total excise tax collected in South AfricaTaxes paid to governmentEstimated number of employees in the liquor industryEmployment (direct, indirect and induced)Contribution to SA’s balance of payments - net exports in 2008Growth in liquor exports since 20002R57.3 billion51%R10 billion47%R34.7 billion21,300522,500R3.8 billion253%
Black economic empowermentIn 2010, SAB launched its BBBEE initiative, called SAB Zenzele, which involved theR7-billion issue of approximately 8.45% of the company’s share capital to a broadbase of black participants, including SAB employees, black-owned beer and soft drinkretailers and the wider public through the formation of the SAB Foundation.This transaction created over 30,000 new blackshareholders in SAB Zenzele, and SAB’s employees nowown 3.39% of the company through the SAB ZenzeleEmployee Trust.In November 2011, SAB declared an interim dividend ofR36.91 million in respect of the shares held by the SABFoundation and Zenzele. This was a 14% increase onthe interim dividend declared in 2010 and was the thirddividend declared since the programme was launched.The SAB Foundation has established a number ofprogrammes to address economic growth, job creationand innovation through entrepreneurship. In partnershipwith Endeavor, its Grant Capital Investment fundprovides support and financial assistance to black-ownedbusinesses.The Wine Industry has over the past decade implementedvarious transformation initiatives. There are currently 53wine farms which are either fully black-owned or majorityblack-owned in the Western and Northern Cape, withthe number of projects increasing annually. The wineindustry is actively involved in assisting these farms interms of market opportunities, funding and facilitation togovernment grants and services.Responding to the objectives of the 2003Liquor ActThe main objectives of the Act are:1. to reduce the socio-economic and other costs of alcohol abuse2. to promote the development of a responsible and sustainableliquor industryWith these objectives in mind, the ARA believes that – Alcohol policy must operate within a reasonable regulatoryframework that balances individual freedoms with the wellbeing of society Government should appropriately and effectively regulatealcohol beverage sales Government should set a minimum age for the purchase ofalcoholic beverages Laws should penalise those who illegally supply alcohol tothose under the legal purchase age Government should enforce laws against drinking and drivingand impose severe penalties on those who violate them Illicit trade in alcohol can cause serious health and socialproblems and government should enforce laws to prevent this.VinPro, representing 3600 wine producers and privatecellars, has committed R10 million over a 10 yearperiod, to the facilitation of BEE advisory services viaan advisory desk. This service not only facilitates landreform transactions, but also assists wine producers toimprove their BEE score under the critical elements ofskills development and social upliftment.KWV completed a BBBEE transaction in September2004, in terms of which a consortium of Withmore 1Investments, a black owned company, and the KWVEmployees Empowerment Trust acquired 25.1% of thecompany’s shares. The Trust has as its beneficiarieshistorically disadvantaged employees. Since 2004Hosken Consolidated Investments Limited, a black ownedinvesting company, purchased 35% of KWV’s shares. KWVis therefore for all intents and purposes a black ownedcompany. KWV furthermore paid an amount of R370million over a period of 10 years to the South AfricanWine Industry Trust, which was controlled by the Ministerof Agriculture, and whose chief purpose was to empowerpreviously disadvantaged farmers in the industry.3
How the industry is responding toGovernment’s top five prioritiesThe South African liquor industry regards with pride the contribution it has made tosociety since the dawning of a democratic South Africa.The industry takes its social, economic and environmentalresponsibilities and obligations very seriously. In meetingthese responsibilities, it has been guided by the nationalpriorities set by Government, particularly in the fieldsof job-creation, the nurturing of skills among emergingentrepreneurs and the advancement of certain keyobjectives such the combating of crime, rural developmentand education.These are examples of just some of the programmesand initiatives undertaken by the industry jointly orindependently to fulfil Government’s agenda.Job creation brandhouse’s Pitch and Polish campaign equips youngemerging entrepreneurs with the opportunity, supportand expertise to succeed in their own businesses. SAB’s KickStart initiative is a youth entrepreneurshipprogramme that supports the establishment ofsustainable black youth-owned businesses in order tocontribute towards economic growth and job creation.Since its inception in 1995, KickStart has empoweredmore than 23,000 young entrepreneurs withentrepreneurial skills and enabled the establishment ofalmost 3,200 small businesses. Investment by SAB inthe programme has exceeded R64 million. The wine industry is also working closely with theWestern Cape Department of Agriculture to implementsuccessful enterprise development initiatives underthe Commodity Approach Project. This unique fundingmodel has successfully funded 13 empowermentprojects to the value of R13.5m over the past 2 years.The effect of this funding will directly benefit a total of576 beneficiaries of whom 533 are farmworkers or theirdirect family members.Crime prevention The Responsible Trader Programme, funded by SAB,is the first of its kind in South Africa to recruit liquortraders as champions in the fight against alcohol abuse.Designed in consultation with law enforcement agencies,its objective is to encourage self-regulation amongtraders by creating awareness of the social, health andeconomic consequences of irresponsible trading. In its4
first year of operation, more than 13,000 traders weretrained and the programme’s goal is to reach 30,000licensed and informal traders.HIV/Aids In support of the Department of Health’s campaign tomake condoms available in communities across thecountry, SAB has deployed its extensive distributionnetwork to deliver boxes of condoms to taverns. Duringthe project’s three-month pilot phase, SAB distributedover 1.8 million condoms to more than 3,000 taverns.This programme is now being rolled out nationwide andit is expected that more than 845 million condoms willbe supplied to local taverns over the coming years. Allindustryplayersconductextensiveandcomprehensive HIV/Aids education programmes withemployees to make sure that they are made aware oftesting, treatment and counselling facilities.Rural development The South African Wine Industry Trust, in partnershipwith the Western Cape Department of Agriculture, fundsthe Rural Development Network (RUDNET), a groupingof NGOs involved in community upliftment programmesamong farm-working communities. Their empowermentprogrammes focus on the social challenges faced byyouth and women, including alcohol and drug abuseand HIV/Aids. The Perdeberg Farm Worker Project in the Paarl districtis an ARA project launched in 2011 in collaborationwith Wine Cellars SA and VINPRO. It is regarded as anindustry test case and will lead to a better understandingof the challenges in bringing about permanent change inthe lives of farm workers. It works in close associationwith farmers and has initiated numerous programmesto develop workers, their families and communities. Social upliftment of farmworkers remains a priorityand the main players in the wine industry recentlycommitted to have their members accredit as ethicalwine producers, according to the WIETA (http://www.wieta.org.za) standards. In addition, there has beena strong increase in individual initiatives amongstproducers which aim to improve the quality of life oftheir workers. These include assistance in terms ofeducation, housing, health, sport and cultural needs.Education brandhouse has invested heavily in tertiary level adultlearning institutions and programmes that aim to addressSouth Africa’s shortage of high-level professional andmanagerial skills. The company is a strategic partner inthe Tertiary School in Business Administration (TSiBA),which provides access to high-quality business educationthat is focused on entrepreneurship and leadership. KWV has funded the Lifeskills programme, whichprepares young adults for the new and often demandingsocial and business situations they will meet oncompleting school. The programme equips studentswith life-skills with which to approach the demands oftertiary education college and work situations.5
How the industry is responding to alcoholmisuse and abuseThe liquor industry is a controversial one, dealing in a product which – if not regulatedwith care – can cause harm to certain vulnerable groups.For that reason, the industry has introduced extensiveand research-based programmes to prevent the abuse ofalcohol, to mitigate its negative impact on society and toencourage a culture of responsible consumption.These include projects that address – among manyother issues – underage drinking, drinking and driving,promoting responsible drinking, and Foetal AlcoholSyndrome.1. Underage drinkingThe industry agrees that maintaining and enforcing a legaldrinking age is critical to addressing abuse; underagedrinking in South Africa is a serious issue that affects notonly young drinkers themselves, but their families andcommunities.6 The World Health Organisation has identified youthsport as one of the most effective mechanisms to divertthe young from destructive social behaviour, includingalcohol abuse. For this reason SAB has launched a pilotproject with the KwaZulu-Natal Department of Arts,Culture, Sport and Recreation to establish sports fieldsin areas identified as hotspots for youth crime andunderage drinking and close to schools. SAB’s You Decide programme took a 45-minuteinteractive road show to 400,000 learners in 360 schoolsin KwaZulu-Natal, Mpumalanga, the Free State, andNorth West. Each road show consists of an interactiveplay for pupils, focusing on the consequences of badalcohol-use decisions, and is supplemented by materialfor teachers and parents, aimed at curbing underagedrinking. The ARA funded the publication of a Teenagers &Alcohol Guide, developed by the Business Support Unitat Bishops school in Cape Town and leading medicalprofessionals, psychologist and educators and a pilotinitiative in schools in the Western Cape. The guide isintended to foster open, honest conversations withinfamilies about alcohol use and reduce the harmfulconsequences of under-age drinking. The guide hasbeen used by various schools, NGOs and the SouthAfrican Police Services.
The ARA has partnered with Life Talk, a non-profitorganisation addressing the challenges faced bycontemporary teenagers, providing funding to enablethe organisation to appoint representatives in Gautengand the Western Cape.brandhouse has embarked on a new partnership withLife Talk, Khulisa and SANCA in order to develop anintervention that will target high school pupils. Apilot programme has been run on the Cape Flats inthe Western Cape and the programme will be rolledout nationally once the results of the pilot have beenevaluated. This programme will see scholars, teachersand parents in pre-identified high risk areas beingtaken through a series of talks and counselling. Topicscovered in these sessions include identifying alcoholand substance abuse in teens, how to cope with alcoholand substance abuse. Peer Educators will be trainedand equipped with relevant information and referencematerial.2. Drinking and drivingIn South Africa, driving under the influence (DUI)contributes to 25% of all alcohol-related deaths in thecountry, which is estimated at approximately 5,000 peopleper year. The industry endorses international researchwhich has shown that strong enforcement of the law is theonly effective way to change the behaviour of those whoknow the risks but continue to drink and drive regardlessof the safety of others. And South Africans share andsupport this view.A highly representative and independent surveyconducted by Ipsos-Markinor conducted in 2010showed that 82% of the public, 98% of governmentrespondents and 83% of media respondents agree orstrongly agree that existing alcohol regulations shouldbe more strongly enforced. There was no associatedcall for more regulation.The prosecution rate for drunk driving is extremely low,primarily because of a poor evidence chain related tobadly maintained breath testing equipment, incorrecttesting and slow blood testing processes. Recognising thisweakness, the industry has responded to the issue: Since 2009, SAB has partnered with local lawenforcement agencies to establish 15 alcohol evidencecentres (AECs) across the country, where reliableevidence for use in prosecuting DUI cases is collected,via breath tests.Each AEC is outfitted with the latest equipment toaccurately detect a driver’s breath alcohol level with asingle breath sample. Centres are equipped with DrägerIntoximeters (breathalysers) which take an instant andaccurate reading of the breath alcohol level. Advantagesof the Dräger alcotest readings are that they reduce theprocessing time and improve the quality of evidence whichcan be used to secure a conviction of drunk driving. Theprocess was designed with assistance from the NationalProsecuting Authority.7
To date, more than 17,500 people have been processedthrough AECs. The Western Cape noted a 12% reductionin road fatalities in the year since the inception of theirSHADOW programme, which includes an SAB-funded AEC.In the three months after its launch in June 2011, thecampaign had reached over 4 million people throughdigital and social media. Research has shown that the establishment of AECs hasencouraged more responsible road behaviour. SAB’s R50-million Reality Check campaign, aimed atdrivers and mothers-to-be, is the largest investmentto date by an ARA member in raising awareness aboutthe negative consequences of irresponsible drinking. Itaims to counter reckless attitudes towards drinking anddriving through adverts filmed at real roadblocks andshowing the hard-hitting reality of what happens whenpeople are pulled over for driving under the influence.Public engagement points for the campaign includewashrooms, campuses, carwashes, buses and otherhigh-traffic outdoor areas. In addition, the campaign waspresented in mass-reach media like newspapers, radio,magazines and billboards. 8No Regret Friday uses high-profile celebrities – such asBafana Bafana coach Pitso Mosimane, Springbok rugbyhero Schalk Burger and musician CrashCarBurn - whoare committed to drinking responsibly and encourageothers to do the same.brandhouse’s responsible drinking programme wasshaped by the company’s own research, which setout to establish why so many South Africans drinkand drive when it is clearly irresponsible and illegal.The research found that consumers are aware of thedangers of drinking and driving but, believe they won’tget caught or have an accident – “It won’t happen tome.”The result was the Drive Dry initiative, which flighted atelevision advertisement showing what possibly awaits aperson who has been caught over the limit and sent to jail.This campaign which has now been extended has beenhighly rated for its effectiveness as a deterrent. brandhouse runs a No. 1 Taxi Driver Campaign whichencourages responsible driving among the more than200,000 minibus taxis that daily transport millionsof South Africans. It is the only public-private sectorinitiative of its kind in the taxi industry and is veryhighly regarded by government, the taxi industry andthe commuters who benefit from having better, moreinformed drivers.
3. Promoting responsible drinkingAll industry players run exten
Contribution to SA’s balance of payments - net exports in 2008 R3.8 billion Growth in liquor exports since 2000 253% Key statistics for the South African liquor industry (2009) Contributing to the economy of South Africa The South African liquor industry is a major force in the South African economy,
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