Alcohol ad ban would cost jobs and revenue: analyst

2011-07-05 10:50

A complete ban on alcohol advertising will result in a total loss of revenue, including sponsorship, sports development leveraging, events and below the line activities, of R2.6 billion, a preliminary impact study has found.

The actual impact on alcohol abuse would be negligible, independent marketing analyst Chris Moerdyk said in a statement today.

Loss of above the line advertising revenue for the mass media would be R1.8 billion.

The SABC would lose about R400 million, Dstv and combined about R500 million, and radio, lifestyle magazines, and newspapers the balance.

Another impact on the mass media industry would be job losses of about 2500 – mainly low earner employees in the print and out of home (outdoor) sectors, as well as sports marketing and management companies.

However, many media companies believed the figure of 2 500 was too low, Moerdyk said.

The impact on the alcohol industry itself would be a short-term drop in branded liquor consumption of between five and eight percent, but this would
recover in the medium-term due to direct marketing.

“Brand leaders would, in fact, benefit from an advertising ban by increasing market share at the expense of lesser placed brands.”

The impact on dependants of retrenched employees would result in approximately 30 000 people losing their breadwinners due to the high number of dependants per breadwinner in the lower ranks of the workforces, in particularly the print and out of home industries.

The impact on alcohol abuse would be negligible, Moerdyk said.

Precedents in Canada, Denmark, and New Zealand found no evidence of reducing alcohol abuse – which resulted in bans on alcohol advertising being lifted.

The impact on substance abuse in poorer areas would also be negligible due to alcohol and substance abuse emanating mainly from non-branded liquor products such as home brews and methylated spirits as well as, glue, tik, and other substances.

Regarding the impact on the South African fiscus, Moerdyk said a study was still underway by an independent accountancy firm.

However, one example would be the loss of VAT on about R2 billion of the R2.6 billion, due to advertising budgets being allocated directly to the bottom line in most liquor firms. VAT loss would be some R280 million.

An unintended consequence of a ban on alcohol advertising would be increasing pressure from within South Africa and the World Health Organisation (WHO) to ban fast food advertising.

The WHO had identified obesity as the biggest global health hazard.

It would be difficult for government to justify banning alcohol advertising without banning fast food advertising, the impact of which would be a further 3 000 job losses in the media and marketing industries.

The impact on television programming would be two-fold. Firstly, the inability to purchase sports programming from overseas due to a loss of revenue, and secondly, the inability to broadcast sports and lifestyle programming containing embedded liquor sponsorship or branded content.

“Given the role advertising leveraging plays in liquor industry-sponsored sports development projects, these projects would more than likely be curtailed or abandoned should the liquor industry not be able to derive any added value benefit.”

Further, liquor industry sponsored Drink/Drive advertising campaigns at Easter and Christmas could be severely compromised should liquor industry sponsors not be able to “brand” these campaigns.

South Africa’s potential to host international sporting and commercial events and exhibitions would also be compromised should any of these events have a global liquor sponsor, such as Budweiser for the 2010 World Cup, Moerdyk said.

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