Minimum alcohol pricing plan risks deepening inequality, fuelling black market: Mukundi Budeli

Key topics:MUP on alcohol may worsen inequality and fuel illicit trade in South AfricaPolicy assumes price deters abuse, ignoring local economic and social realitiesCritics say it punishes the poor while failing to address root causes of harm.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Mukundi Budeli*.In November 2024 the National Treasury announced its intention to introduce a minimum unit price (MUP) on alcohol and set 13 December 2024 as the initial comment deadline – targeting the lowest-priced drinks on the market. Framed as a health intervention to reduce alcohol abuse, the measure would make it illegal to sell alcohol below a specified price per unit of pure alcohol, potentially around R10. While the policy borrows from international models, particularly Scotland’s 2018 MUP law, its application in South Africa raises serious economic, legal and ethical concerns. Far from advancing public health, the policy risks deepening inequality, fuelling informality, and entrenching state paternalism under the guise of harm reduction.The comparison to Scotland is often raised to justify the policy, but it is deeply flawed. That country introduced a minimum unit pricing law which made it illegal to sell alcohol below a set price per unit of alcohol, defined as a standard measure of pure alcohol. The policy was designed to reduce harmful drinking by making the cheapest, strongest drinks less accessible. While it achieved mixed results, its enforcement relied on strong institutions and a largely formal retail economy, conditions that do not exist in South Africa. How would units be defined? The proposed policy also mandates the removal of promotions that aid alcohol retailers in being competitive. The state’s rationale is clear: raise the price of cheap alcohol, reduce its availability, and thereby reduce harmful drinking, particularly among young and poor South Africans. Treasury has cited alcohol-related trauma cases, hospital burdens, and drunk-driving statistics to justify the measure. However, this logic presumes that demand for alcohol is highly responsive to price and that restricted access will deter harmful use. In the South African context that assumption is dangerously optimistic.During the COVID-19 lockdowns, the state imposed some of the most aggressive alcohol prohibitions in the world. Sales were banned completely for extended periods in 2020 and 2021. Rather than leading to sobriety, the ban gave rise to a booming black market. According to the South African Liquor Brandowners Association and Euromonitor the illicit alcohol economy expanded by over 20 percent. Homemade alcohol, smuggled spirits, and dangerous concoctions circulated widely. Cases of poisoning and hospitalisation increased, and law enforcement could not keep pace. The networks built during this time did not disappear when the ban was lifted, they adapted and remained. Today, informal alcohol channels remain active and highly profitable, operating outside tax systems, quality controls, and regulation.Minimum pricing does not ban alcohol, but it has the same structural consequence for low-income consumers: exclusion from the formal market. Poor and working-class South Africans, especially youth, are the primary consumers of cheap alcohol. These include ciders, sorghum beer, budget brandy, and plastic bottle spirits — often costing under R10 per unit. If the MUP takes effect, those products will disappear from shelves or be rebranded at a higher cost. Those who cannot afford the increase will seek alternatives elsewhere, as they did during lockdown. Illicit traders, unlicensed brewers, and cross-border smugglers will fill the vacuum.Unlike Scotland, South Africa has deeply entrenched inequality, high unemployment, and a limited enforcement apparatus. The idea that SAPS or provincial liquor authorities can monitor every tavern and shebeen for pricing compliance is unrealistic. More likely, compliance will fall on larger formal retailers, while small vendors face disproportionate scrutiny, fines, or closure. That outcome is not only unjust, but also unconstitutional..Read more:.Rethinking the risk of Alcohol: Strong link to cancer exposed – Lisa Jarvis.The Constitution protects the right to choose one’s trade, occupation, or profession (section 22), and guarantees the right to equality (section 9). When the state uses pricing tools to deliberately exclude a section of the population from legal markets, it effectively introduces a class-based barrier to commerce. In this case, it is a barrier that punishes poor consumers and township-based vendors for behaviours that wealthier citizens will continue to enjoy – albeit at a higher price. The implicit message is that responsible drinking is a luxury of the middle class.South Africa already has some of the most restrictive alcohol laws in the world. Sale hours are limited, licensing is complex, zoning laws prohibit outlets near schools or churches, and advertising is tightly regulated. Despite these constraints, the country has not seen a meaningful decline in harmful alcohol use. The problem is not the absence of regulation, but the absence of targeted, evidence-based reform. Public health strategies that work in high-income countries with stable governance cannot be transplanted wholesale into an environment where informal trade dominates and law enforcement is patchy at best.Moreover, the policy reeks of state paternalism. Instead of engaging with why people drink excessively, including unemployment, trauma, violence, and social exclusion, the state proposes to make alcohol more expensive. This is not a solution; it is a punishment. It infantilises the poor, assuming they cannot be trusted to make decisions about their own consumption. It also evades the state’s own failures in education, healthcare and economic inclusion, shifting blame onto the behaviour of individuals.If the state is genuinely concerned with alcohol-related harm, there are more effective and rights-compatible alternatives. Expand access to community-based addiction treatment. Fund public health campaigns that speak to agency and dignity. Provide meaningful economic opportunities that reduce the demand for escapism. And above all, treat citizens as partners in reform, not targets of control.Minimum pricing is not an innovative intervention; it is austerity disguised as morality. It may reduce alcohol purchases in formal markets, but only by driving poor consumers into the shadows and punishing legitimate small businesses. In a country still recovering from the damage of prohibition and the collapse of trust in state authority, this is a risk we cannot afford.If the government wants to reduce harm, it must begin by respecting the agency and equality of those it claims to protect. Otherwise, the minimum price on alcohol becomes a maximum insult to South Africans. .*Mukundi Budeli is a final year LLB student at the University of Witwatersrand and an Associate of the Free Market Foundation.

Minimum alcohol pricing plan risks deepening inequality, fuelling black market: Mukundi Budeli

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