Prohibition: A double-edged sword

by | Apr 24, 2020 | Article

The South African government has banned all transportation of alcohol during its national lockdown in April 2020. For many, this measure seems excessive and unwarranted, while for others – including police minister Bheki Cele – it’s both necessary and appropriate.

The South African government has banned all transportation of alcohol during its national lockdown in April 2020.

For the wine industry in particular, the implications extend far beyond an immediate need for physical distancing. It is estimated the wine industry could lose more than R1 billion (FOB) in export revenue during the five-week ban. An alcohol industry task team led by Vinpro, the South African Liquor Brandowners Association (Salba) and the Beer Association of South Africa has continuously lobbied Government to allow responsible trade in off-consumption and transportation of finished goods under strict conditions.

They arguing that restrictions should balance both the mitigation of health risks and preserve the stability of the legal liquor industry.

By failing to heed these appeals, the government risks incentivising an already problematic illicit liquor trade and entrenching illegal manufacture, excise tax losses and black markets that weaken the prospects of lasting change.

Justifying the ban

The Southern African Alcohol Policy Alliance in South Africa (SAAPA SA) states that alcohol reduces a person’s ability to exercise social distancing, and the personal hygiene required to limit the spread of the virus. It argued alcohol weakens the immune system and can exacerbate domestic violence during the confinement. Alcohol’s absence would help break the chain of infections and reduce stress on emergency services who won’t have to deal with other social ills.

Meanwhile, Australian retailers have been allowed to self-regulate. On 1 April, many large Australian retailers voluntary began to limit the amount of alcohol customers can buy in a single transaction. The State of New York has also placed wine and spirits stores on the list of essential businesses. The New York State Liquor Stores Association confirmed sales have increased significantly – a welcome contribution to its suffering economy.

Alcohol bans during the crisis are mostly meant to discourage non-essential contact, which holds down the curve of new infections with the COVID-19 virus. “Alcohol consumption is a very social activity – most alcohol is consumed in a group setting or around a table. There is also the contact inevitably involved in shopping,” says Robin.

“Given the COVID emergency, anything which tends to restrict socialising outside the immediate family should be considered, including issues of domestic violence. Excessive alcohol use at home has also been associated with increased rates of domestic violence and there’s been a spike in Australia where ‘takeout’ alcohol sales have mostly been permitted.

It’s far from clear how blocking wine exports, for instance, achieves these aims. If the government simply intended to take a strong swig of temporary reductions in alcohol-related socialisation and the harms of its abuse, its eventual restrictions amounted to drinking the whole bottle.

Bheki Cele: “I wish alcohol ban could be extended beyond lockdown”.

Prohibition hangover

Professor Robin Room of the Centre for Alcohol Policy Research (CAPR) at La Trobe University in Melbourne, is a global expert on the health effects of alcohol and other drugs. He explains that total or ‘blanket’ bans are only effective up to a certain point, depending on how strong the regulatory enforcement is.

“Historically the immediate effect is often stronger than the effect after some months, as alternative supply mechanisms emerge.” 

Whether comprehensive bans end up being counterproductive depends on how you define “productive”, says Robin. During America’s notorious 13-year prohibition of 1920-1933, the illegal trade in alcohol fed organised crime. The government lost out on billions in tax revenue as people bought up yeast and dried grapes to make alcohol at home. It reduced alcohol consumption by two thirds. But Prof David Jernigan of the Boston University School of Health cautions against making comparisons with the US prohibition era. “It was long-term, and had many loopholes.”

Robin’s own research concluded that there’s ample evidence that restrictive and punitive policies are often more effective in the short run than in the long run, not to mention the examples where a policy with one effect in the short run had an opposite effect in the long run. The initial measures are a desperate sprint to gain a temporary foothold. But the fight against COVID-19 will be a marathon, and hamstringing the wine industry now will only make future efforts harder.

Fighting back

Nicolò Pudel, proprietor of online wine store Port2Port, says the total ban on trading alcohol came as a shock and took many in the industry by surprise. After the lockdown was announced, there was a window period when Port2Port initially saw a spike in sales.

During this time they focused on fulfilling pending orders as quickly as possible, as panicked buyers wanted same-day deliveries. The initial frenzy died down within days, forcing Nicolò to adapt. Port2Port had never discounted before, but it began offering members a promotional price on orders placed during lockdown, to be delivered once the ban has been lifted. The #isolationwine promotion boosted sales considerably, says Nicolò.

Another successful initiative was a series of masterclasses which enlisted producers and wine experts such as Michael Fridjhon, Alex Dale (from Radford Dale), Stefano and Lorenzo Gabba (Vino.co.za) to present tips on wine regions and collectable wines over Zoom. The series was able to attract a surge of interest and new sales. But Nicolò worries it may not be enough. Without the government’s support and an easing of the alcohol ban to allow for online sales and private deliveries, local innovation and ecommerce is effectively stifled.

Port2Port has since fast-tracked its European offering and launched a UK portal to begin selling wine in countries where e-commerce is deemed vital.

Measured against other wine-drinking nations, the government’s stance against alcohol lacks nuance and appears opportunistic and short sighted, not to mention catastrophic to the wine industry and its value chain, which includes its ability to support jobs, training, tourism and other activities that are crucial to rebuilding the economy.

Government’s measures aimed at combating COVID-19 are a double-edged sword that has to be wielded with care and precision – or wreak havoc.

During America’s notorious 13-year prohibition of 1920-1933, the illegal trade in alcohol fed organised crime and government lost out on billions in tax revenue.

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