In the late 1990s, Nepal for the first time restricted the advertisement of alcoholic beverages in electronic media. The government of Nepal imposed additional control post 2017, which barred liquor companies to publish advertisement in print media and conduct any type of promotional activities including sponsorship. While the initial restrictions were executed to extend support to international community, more recently the government claims to have levied stricter regulations to discourage the use of toxic substance as it has wider social and public health considerations.
But, public policies have broader implications and might have consequences other than those intended. In the case of banning alcohol advertisement in Nepal, the policy has indeed come out to be ineffective, and has instead introduced harmful externalities in the economy.
Here are three reasons why ban on alcohol advertisement in Nepal is not a judicious policy.
- The policy has not been able to meet the very aspect of its initiation – discouraging the consumption of alcoholic beverages. Over the past two decades, per capita alcohol consumption in Nepal has remained intact at 2 liters. International researches also show that the increase in alcohol advertisement expenditure or ban on advertising has a weak and often inconsistent impact on per capita consumption of alcohol. Many policy analyst and concerned stakeholders have repeatedly argued that increment in awareness campaigns regarding adverse effect of alcohol consumption can have higher effect in limiting the use of alcohol among general public. In Nepal, 1 in 2 individuals claimed that they were acquainted with messages that illustrate the harmful effect of alcohol consumption. Apparently, many alcohol companies themselves are engaged in promoting messages that aware citizens on limiting alcohol use. Leveraging the same, some countries have issued guidelines where liquor companies need to promote safety campaigns along with beverage advertisement. Contrary to the effects of banning, such policies will help the government save the additional cost of running the awareness campaign whilst also ensuring that the reach of public awareness is increased.
- WHO-STEP Survey 2019 depicts that despite the ban in alcohol advertisement, 1 in 5 Nepalese individuals have come across different promotional materials of liquor industry. This implies that the companies have continued to advertise their products through different channels which, being unknown, can in no way be regulated. If viewed globally, alcohol industry advertisement accounts for a major revenue source for many sectors including advertising, media, sport, tourism and hospitality, among others. Putting a complete halt on liquor advertisement is thus bound to negatively impact multiple sectors of the economy and cost many jobs. This holds true for Nepal as well. Currently, advertising agencies in Nepal along with print media are struggling to stay afloat as liquor industries accounted for a major source of their revenue.
- The policy puts old liquor industries at an unfair advantage as the new entrants are unable to market their products among the consumers. Policies that require mandatory incorporation of pictorial health warning covering 75% of alcohol containers augments the entry barrier. Such policies thus distorts competition and limits the productivity of domestic firms. Additionally, it acts as a great disincentive for investors to invest in new liquor production firms. This can be regarded as a major reason behind huge gap in demand and domestic (formal) supply of alcohol which has resulted in an upsurge in imported liquors. While Nepal has been exporting few alcoholic beverages, the true potential of Nepalese liquor in the global market remains unknown. For Nepal to tap the opportunity, Nepal needs to set loose the restrictions to market and brand the products.
Given the imperativeness for Nepal to create more jobs and revive the economy, revoking the complete ban on advertising of alcoholic products and merely regulating its standard can provide much respite to the economy. It will not only incentivize the establishment of new industries but also will simultaneously support numerous other sectors of the economy. Right policy and regulatory environment can result in greater benefits for the government in the near future than those provided by the taxes imposed on imported liquors.