Signing away black businesses
A ban on liquor adverts will cripple small companies that rely on the industry’s less visible side, such as billboard production and placement
IT IS quite unfortunate that the debate about the advisability of a total ban on alcohol advertising has focused on the likely effect on the profitability of the major liquor companies, the sponsorship of major sporting codes and the loss of revenues across print and broadcast media.
Although all these concerns raised by large liquor industry players are legitimate, less attention has been paid to the effect on thousands of small businesses that operate on the downstream links of the advertising value chain. Their voices seem to be victims of their size in circumstances where size does indeed appear to matter. As the saying goes, when two elephants fight, it is the grass that suffers.
Up to 40% of the income of small and medium enterprises comes from liquor adverts
The Q&A featuring Health Minister Aaron Motsoaledi published in last week’s Sunday Times exposed his flawed logic as well as his obsession with big liquor business at the expense of small businesses that make up the industry’s procurement value chain.
As small black businesses, we are determined to play our role as key contributors to job creation and opportunities for those marginalised by the broader economy. Motsoaledi focused on the supposed R1-billion in advertising spent by three large alcohol producers, but the small guys appeared inconsequential. In doing this, the minister disregarded the context and ecosystem in which small business and the liquor industry operate.
Less prominent in the public eye than the multinational advertising giants such as Ogilvy, McCann Er- ickson and Saatchi & Saatchi, or top South African alcohol sellers such as SAB, Distell and KWV, are hundreds of small firms such as ours, active in fields as diverse as media-buying, printing, design, sign-writing, direct mailing and outdoor billboards.
Many of these enterprises have enabled black people to gain a foothold in the business world, thus advancing the government’s commitment to the transformation of our economy.
Beyond the industry giants, there are thousands of companies and individuals in the design, sponsorship and event industries who rely on the alcohol sector for much of their income. They include freelance graphic designers and catering companies, writers of advertising copy, commercial artists, advertising sales people, distributors and deliverers of advertising material, printers and other workers in the market research, public relations and radio, television and film industries.
Also, many talented and celebrated musicians and DJs are able to survive only because of the functions and events made possible by the liquor industry.
Econometrix has concluded that the ban on alcohol advertising would have significant supply-chain effects, leading to significant job losses in print media and advertising companies. It is less often recalled that many of these downstream companies are in the BEE and SMME sectors, providing employment to the less skilled but performing vital roles in the advertising and marketing industry.
Like many small enterprises, they are acutely vulnerable to economic fluctuations and it requires only minor structural shifts for them to be confronted by a devastating loss of income, possible closure and unemployment.
A substantial slice of the advertising sector is what is called “out of home” — outdoor or billboard advertising. In South Africa, the out-ofhome sector is a substantial BEE and SMME employer of mostly the less skilled who do not belong to any professional or regulatory association and rely substantially on the alcohol industry as a “bread and butter” contributor to their revenue.
Virtually all the major advertising companies subcontract their billboard-posting to small contractors, thus contributing to the development of small black business. In excess of 20% of the advertising placed in the outdoor advertising medium is from the liquor industry. Among the larger outdoor advertising companies, income from liquor advertising varies between 12% and 15%, whereas SMEs have exposure of up to 40% and higher. It is therefore not difficult to envisage the effect that an advertising ban would have on this small and largely black sector of the advertising industry and on its transformation potential.
As the advertising industry’s Association for Communication and Advertising has pointed out, its BEE scorecard is more stringent than most, requiring 51% black ownership, whereas the Department of Trade and Industry norm is closer to 26%. It would be a sorry day if this laudable record of transformation in an important creative industry were to be compromised by the forced closure of advertising agencies in the wake of an advertising ban.
The often-repeated refrain that the liquor industry, which by implication includes all the businesses in the value chain that market the liquor brands, is only interested in profits and not the country’s health issues could not be further from the truth. It is our brothers, sisters and communities that are negatively affected by alcohol abuse and we are as concerned as the minister about these issues.
To promulgate damaging legislation that is based on inconclusive research, even if it seems “just common sense”, as Motsoaledi said in last week’s interview, would be reckless.
The tragedy is that if we do ban alcohol advertising and the abuse does not diminish, our small black businesses, with the jobs and opportunities they create and the revenue we contribute to the tax purse, will be gone for good.
Matsepe, who is a small-scale media owner, writes in his personal capacity