Poverty and Alcohol
Alcohol consumption is a financial drain for the poor. The reported share of household income spent on alcohol and tobacco by the poor is high in many countries, ranging from 6 percent in Indonesia to 1 percent in Nicaragua.37 The poor in India spend about 3 percent of their household income on alcohol and tobacco.38 These numbers understate the true consumption level since it is usually only the man in the household who engages in this consumption. An in-depth field study in Sri Lanka found that “money spent on alcohol by poor families and communities is underestimated to a remarkable degree____A large part of alcohol expenditure is unseen____Over 10 percent of male respondents
report spending as much as (or more than!) their regular income on alcohol.”39 Sadly, the poorer people spend a greater fraction of their income on alcohol than the less poor.
Given their bleak lives, it is understandable why the poor spend so much on alcohol and tobacco. These addictive substances often enter their lives as analgesics from extreme labor. In addition, poor people often encounter stressors including hunger, pollution, overcrowding, and violence that lead them to act in ways that may alleviate suffering in the short term, but hinder economic prosperity in the long term. While such behavior is understandable, that does not reduce its negative consequences. Public health experts Efroymson and Ahmed tell a moving, but not uncommon, story of Hasan, a rickshaw puller, who spends $0.20/day on tobacco.40 When asked if his three children ever eat eggs, he exclaimed, “Eggs? Where will the money come from to buy them?” If Hasan did not buy tobacco, each of his children could eat an egg a day, or other nutritious foods, and be healthier as a result. For more affluent people, the consequences of cigarette smoking are not as dire as children’s malnutrition.
Aside from the direct financial cost, alcohol abuse imposes other economic and social costs such as work performance, health, and accidents. “Domestic violence and gender-based violence was almost taken for granted in nearly all settings as an automatic consequence of alcohol use. Deprivation of the needs of children due to the father’s heavy alcohol use was regarded simply as a misfortune of the children concerned.” There is much evidence showing alcohol abuse exacerbates poverty.41
The Economist approvingly cites SABMiller, which has succeeded in several African countries with Eagle, a cheap beer made from locally grown sorghum (rather than imported malt).42 SABMiller is able to price the beer at a level below that of mainstream clear beers in Uganda, Zambia, and Zimbabwe partly because it has obtained a reduction in excise duties from the governments involved. Andre Parker, managing director for the company’s Africa and Asia divisions, says, “The brand is reliant on the excise break, so we are working with the governments to lower the excise rate so that the retail price is below that of clear beer. The margin, though, is at least as good as our other brands.”43 Eagle beer is profitable for SABMiller and a practical example consistent with the BOP proposition, but it is probably detrimental to the overall welfare of the poor consumers. Activist consumer organizations advocate higher (not lower) taxes on alcohol to support public education and rehabilitation programs.44
The poor, of course, have the right to consume, and even to abuse, alcohol. But, it is not in their self-interest to do so, at least not at the levels typically drunk. Companies have the right to profit from the sale of alcohol to the poor. But even in rich, capitalist economies the governments put some constraints on this right, such as “sin taxes,” and by restricting advertising and sales to minors. The industry prefers voluntary constraints rather than regulation. The U.K. House of Commons health select committee recently examined the practices of some British alcohol producers and communications agencies to determine whether the industry’s system of self-regulation and codes of conduct are effective.45 The committee looked at four themes that are banned by the industry’s self-regulated advertising codes of conduct: (1) targeting and appealing to young people; (2) attitudes to drunkenness and potency; (3) association with social success; and (4) sexual attractiveness. The committee found that the codes of conduct are systematically violated in all of these areas. The committee recommended that regulation of advertising practices for alcohol should be independent of the alcohol and advertising industries. The need for regulation of the alcohol industry is even greater in developing countries than in the United Kingdom
In many developing countries, regulatory constraints on the alcohol industry are sometimes missing; even when they do exist, they are poorly enforced, especially in the context of marketing alcohol to the poor. For example, in Malaysia, bottles of samsu (the generic name for cheap spirits) advertise outrageous claims that it is “good for health, it can cure rheumatism, body aches, low blood pressure, and indigestion. Labels also claim it is good for the elderly, and for mothers who are lactating.”46 Even MNCs have gotten into the act. DOM Benedictine, which contains 40 percent alcohol, claims health-giving and medicinal properties. Guinness Stout suggests it is good for male fertility and virility. Alcoholic drinks are easily available in Malaysian coffee shops and sundry shops without a liquor license. Forty-five percent of Malaysian youth under age 18 consume alcohol regularly. In an ironic twist on the single-use packaging discussed in Chapter 3, samsu is available in small bottles of about 150 milliliters (5.1 ounces) and “sold
for as little as $0.40-0.80____It is obvious that these potent drinks
are packaged to especially appeal to the poor.”47
Aside from the government, activist movements also play a role in protecting the consumer. Alcoholics Anonymous is a fellowship of men and women who share their experiences, and help each other that they may solve their common problem with alcoholism. The poor in emerging economies usually do not have access to such rehabilitation programs. In 1991, Heileman Brewery in the United States introduced PowerMaster, a malt liquor with a high alcohol content, targeted to African Americans community. Community leaders began a campaign that resulted in the product being withdrawn from the market within a few months. Such social mechanisms for consumer protection are often very weak in developing countries, and even more so with regard to poor people.