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Heineken in a froth

Dec 11 2016 06:23
Justin Brown

Heineken South Africa is expecting to take a hit if a proposal to hike the legal drinking age from 18 to 21 years is implemented, according to the managing director for the brewery, Ruud van den Eijnden.

“Heineken South Africa agrees with the minister [of trade and industry, Rob Davies] that alcohol abuse is a serious challenge in South Africa, and there is a need to intensify our joint efforts to combat the harm related to it,” Van den Eijnden said during an interview.

Heineken South Africa is 75% owned by Dutch company Heineken and 25% by Namibia Breweries, which owns brands like Windhoek Draught and Tafel Lager.

“We are aware that the liquor industry makes a large contribution to the South African economy in the creation of jobs, supporting small and medium entrepreneurs in the liquor industry, tax revenue, GDP and export earnings,” he added.

“We believe that some of the proposed amendments do not necessarily address the real issues in alcohol abuse, while they will for sure impact the industry’s contribution to our nation,” Van den Eijnden said.

Turning to the move to raise the legal drinking age, he said that 115 nations worldwide have 18 years as legal drinking age and only nine countries, including the US, have 21 years as the legal drinking age.

“So far, there has not been a clear correlation between policy choice of legal drinking age and the incidence of alcohol abuse in a country,” Van den Eijnden said.

“This proposal is also contrary to the legislative norm of the country, where one attains the age of majority at 18, meaning, he/she can obtain a driver’s licence and make independent decisions without parental consent. We foresee quite some implementation challenges in this area,” he added.

Van den Eijnden said that an unintended consequence of the increase in the legal drinking age was that alcohol consumption might shift from licensed on-premises outlets to at-home and illicit consumption, where there might be less control and security.

“As an industry, we recommend to keep the legal drinking age at 18, and increase our collective enforcement efforts on the real issue, of alcohol consumption by underaged teens and irresponsible consumption across the spectrum,” he added.

“The Liquor Amendment Bill also proposes further restrictions in the marketing of alcoholic beverages with increased regulatory powers to the minister.

“The unintended consequence of this proposal is that it will be more difficult for new companies to invest, enter the market and introduce their products to the country due to restrictive advertising laws,” Van den Eijnden said, adding that the industry had submitted its response to the Liquor Amendment Bill.

A key change that the bill is proposing is to make the industry – including manufacturers, wholesalers and retailers – jointly liable for the damage done by unlicensed liquor sales. This liability kicks in whenever anyone who gets drunk at an unlicensed outlet does something harmful.

That includes deaths, injuries or damage to property caused by car accidents, fights or assaults.

If alcohol were involved and if it could be shown that the alcohol had come from an unlicensed outlet, the people who had supplied the outlet could also face fines or imprisonment.

The amendment is designed to choke off the supply of alcohol to unlicensed outlets at the wholesale and manufacturer level by forcing them to more thoroughly monitor their clients.

Turning to the acquisition of SABMiller by Anheuser-Busch InBev (AB InBev), which was completed in October, Van den Eijnden said that Heineken had not seen any intensification of the competitive environment in the local market yet, but it was early days.

Heineken South Africa was looking to set off the expected increased competition by getting the basics of its business right, introducing more of Heineken’s premium brands like Mexican beer Sol, as well as growing its local share of the cider market through its Strongbow brand.

Heineken was one of the world’s leading producers of cider, but in South Africa it had a very small market share so there was a lot of room for growth, Van den Eijnden said.

Heineken owns more than 200 brands and Heineken South Africa manages six – Heineken, Amstel, Strongbow and Sol, as well as two Namibia Breweries brands.

Van den Eijnden said Heineken was expecting AB InBev to start, at some point, introducing its top brands, like Corona, into the country.

Heineken South Africa sells 10% of the local beer volume compared with AB InBev, which sells more than 80% of local beer volumes.

heineken  |  alcohol  |  drinking age
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