Liqueur and souvenir store display window.
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  • Setting a minimum price of R10 per unit of alcohol would save more than 20,000 lives in South Africa over two decades, according to a new paper.
  • Such a floor price would see a 750ml bottle of 5% beer cost at least R25, and a 750ml bottle of wine with 12.5.% alcohol would cost at least R62.50.
  • Some people would switch to homebrew, and demand would fall, modellers say.
  • But they predict that South Africans would spend some R32.5 billion more every year to buy their booze – which is politically useful.
  • For more stories go to www.BusinessInsider.co.za.

Setting a floor price for alcoholic drinks could save tens of thousands of lives, while increasing the revenue of retailers by billions of rands, while a drop in government revenue from excise taxes would be offset by an increase in VAT, according to a new paper.

A minimum unit price (MUP) of R10 for a standard drink unit containing 12g of pure ethanol (the equivalent of 15ml of ethanol) would mean a 750ml bottle of beer with 5% alcohol would cost at least R25, while a 750ml bottle of wine at 12.5% alcohol would come in at R62.50 or more, the researchers say.

Cutting out most of the booze cheaper than that would see spending increase by some 18%, the modellers estimate, while consumption would drop by 4.4%, as various types of drinkers hit the limits of their willingness or ability to pay more for their booze.

The health impact of that consumption reduction, through everything from fewer road incidents to lower rates of HIV infection, would mean 20,585 fewer deaths over a two-decade period, they say – while more money flows into the pockets of those who sell booze.

"Our model estimated that there would be an increase in individual spend on alcohol consumption of R32.77 billion in the year following the introduction of the policy," say the authors. "The government would see an increase in VAT as a result of the increased prices although a reduction in excise taxation due to the reduced volume of alcohol sold. Retail revenue would also increase."

See also | The Western Cape wants minimum booze prices. Those worked elsewhere – after big legal fights

There are complications, such as an assumed but unpredictable increase in homebrew consumption if prices are hiked. But the researchers believe there may be fertile ground for minimum prices right now.

"The periodic prohibition of alcohol during the Covid-19 lockdown demonstrates political leaders' acceptance that alcohol causes harm to SA and signals a potential willingness to take strong action," reads the study.

The study is the first of its kind, say its authors with the University of Sheffield, the SA Medical Research Council, and the University of Glasgow. Similar work has previously only been done in rich countries; no epidemiological model of the impact of minimum alcohol prices had previously been published for South Africa.

It pulled together "a combination of survey data sets, market research data, and evidence from published literature" to estimate the impact of minimum per-unit alcohol prices of R5, R10, or R15.

The Western Cape has considered such a minimum-price policy, but global experience suggests it can expect significant push-back from the alcohol industry, and could take some time to implement.

In consultation with various people and bodies, including national government, their findings on the likely increase of revenues for retailers was a hit, the researchers say.

"Stakeholders were pleased the estimates combined improved health with increased taxation and increased retail revenue, as supporting business was considered politically important."

The study was published in the BMJ Open journal this week.

(Compiled by Phillip de Wet)

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