Impact of liquor proposals on business

Cape Town - Government has proposed tough new legislation in an effort to tackle the problem of alcohol abuse and its associated social ills in South Africa.

But is it using a sledgehammer to crack a nut? Will it penalise responsible drinkers while not materially reducing misuse?

Attorneys firm Simon Dippenaar & Associates looks at the proposed amendments to the Liquor Act.

The 500m rule:

New premises wishing to secure a liquor licence must be located at least 500 metres away from schools, places of worship, recreation facilities, rehabilitation or retreat centres, residential areas and public institutions. Existing licence-holders already within a 500m radius of these venues will see stricter conditions for sales imposed on them.

Liquor licences will no longer be issued to petrol stations:

This includes premises attached to petrol service stations or premises near public transport. The rationale behind this is valid, when one looks at our road traffic accident (RTA) record and the proportion of accidents involving alcohol. But will "public transport" include airports? ACSA revenue would be hard hit if so.

Foreigners travelling to and from South Africa on business are likely to be unimpressed with the inability to have a responsible drink in the lounge before a flight. And what about sales of duty-free alcohol, where the liquor will only be consumed once it has left the country?

Restrictions on advertising and marketing of liquor products:

Television channels will only be allowed to advertise alcohol at night, from 22:00 to 06:00, after the 22:00 "watershed" when it is assumed children are in bed. Content designed to appeal to youth in alcohol advertising will be prohibited. This will include the use of sport stars, models. Branding of delivery trucks carrying alcohol and premises will be banned.

Broad-based Black Economic Empowerment (B-BBEE):

B-BBEE Codes of Good Practice as they relate to licensing conditions will be more strictly enforced and monitored. Noncompliance will result in the suspension or revocation of the licence.

Application for liquor licences:

The administrative burden and cost of liquor licence applications will be shifted from the Liquor Authority, municipalities and the police to applicants. Therefore, whereas under current policy the public participation process is conducted by these entities, in future the applicant will carry the responsibility for contacting the municipality, neighbours, community-based organisations, and for the cost of advertisements in the newspapers.

Police clearance certificates will be required for shareholders and directors of applicants. This provision will be invisible to the public at large but may have serious financial consequences for potential licensees.

Other proposed changes include:

Management of licensed premises and training of managers

Managers of licensed premises will be required to undergo training and pass a test on compliance with the act. The licence-holder or manager must be on the premises whenever the venue is open for business.

Limit on licences in a district based on alcohol-related harms

Where incidence of alcohol-related harm is high, there will be a quota on the number of licences granted in that district.

Renewal fees based on volume

Annual renewals will be linked to the volume of alcohol sold.

Phasing out of grocers’ wine licences

If there is an off-consumption liquor outlet within 50 metres of a grocer’s store, the grocer’s licence will be phased out.

Reduced trading hours

Trading hours will be reduced for on- and off-consumption outlets.

Increased excise and minimum unit pricing

Government will be lobbied to increase the price of alcohol through increased excise tax and/or the introduction of minimum unit pricing.

Penalties for suppliers who sell alcohol to visibly intoxicated drinkers

Suppliers will have to show why they should not bear the costs arising out of the offence committed by an intoxicated drinker they served, if they were aware of the level of intoxication. This could be contentious as there are drinkers, especially "functional alcoholics", who can appear completely sober whilst having a sky-high blood alcohol level.

Make new laws or make the old ones work?

Research reveals mixed findings on the effectiveness of some of the proposed interventions, such as advertisement regulations. However, as indicated above, policies that directly target the availability of alcohol supply and a raised drinking age limit have been proven to be effective at a limited cost to the state.

It is also generally agreed that on-premise interventions (that penalise servers) are inadequate unless coupled with interventions that go beyond off-site consumers.

Inevitably commerce, tourism and agriculture are industries that will be affected and responsible drinkers will face certain curtailments that were never aimed at them in the first place.

Initial feedback suggests that many lower income communities welcome the restrictions and the increased age limit for purchasing alcohol, as residents of these communities know only too well the impact alcohol is having on the youth and on their neighbourhoods in general.

A final concern, as always with legislative amendments, is that an amendment act often completely fails to address issues with the current legislation in force - that is non-compliance with existing laws. There are roughly 150 000 shebeens in the country, with one fifth of them in Gauteng. It is estimated that two out of three shebeens in that province are illegal. Before introducing tougher new legislation, one must be sure it can be enforced.