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Saudi customs officials bust an attempt to smuggle 19,188 bottles of alcohol into the kingdom through al-Bathaa border crossing in 2015 [photo credit: Saudi Press Agency]
In the 20th century drinking spirits, especially whisky and also locally distilled liquor, became widespread and legally permitted in some Arab countries but forbidden in others. As it remains surrounded by taboos, statistics on alcohol consumption and alcohol-related problems are scanty and unreliable but Arabs drink very little, with the percentage of the population drinking alcohol at least once a year and per capita consumption far lower than that found almost anywhere else in the world. In very few places in the Arab world is alcohol a well-established part of daily public life with its own local rituals and habits.
Although laws surrounding alcohol in the region tend to be strict in practice, regulation is lax and regimes operate a sliding scale in terms of what is tolerated depending on who is involved and the circumstances, leaving ample room for international alcohol producers to play around and see what they can get away with even in markets where they are theoretically forbidden. For example, even though advertising alcohol is forbidden in most Arab countries international firms still use alibi brands - brands that look much like well-known alcohol brands but without the name itself - to achieve significant advertising coverage.
Abuse and even death from alcoholism or from badly produced home-distilled spirit is a serious problem, although good quality wines and spirits are also sometimes manufactured at home. The common name for home-distilled liquor in Saudi Arabia, siddiqi, literally “my friend”, is said to derive from friendly relations with the first American oilmen in Arabia.
Besides Saudi Arabia, the only other parts of the region that are still completely dry are Iran and Sharjah. Legalisation in Saudi Arabia would likely follow the same model as in the UAE where according to the law an individual requires a state-issued alcohol license, a ‘liquor license’, in order to buy alcohol locally. In Dubai only non-Muslims and non-Emiratis can obtain one. The UAE also imposes a daily ceiling on how much you can spend on alcohol based on your monthly income.
Though alcohol is tolerated in the UAE major alcohol companies are still not allowed to produce there and so they cover markets in the region through their export business. From hubs such as Dubai, which is the biggest importer in the Gulf, alcohol is sold on to traders and distributors who take it across the region. It is an open secret the amount of alcohol sold in Bahrain is way beyond the amount consumed there because so much is sold on to the black market in neighbouring countries where alcohol is prohibited.
As in other Gulf countries there are potentially two separate markets for alcohol in Saudi Arabia: expat and local. Expats’ drinking habits are well documented but the potential future size of the local market will require measuring how much Saudis themselves drink. The best available guide for this would likely be in Oman where like the UAE alcohol can be purchased easily and locals drink quite heavily by Gulf standards, although not by international ones.
When it comes to alcohol distribution and sales in the Arab world, Duty Free shops are a notorious “rules free” zone and a fountain of corruption. Egypt recently changed its rules over Duty Free purchases and then denied it reportedly because Diageo is considering entering the Egyptian market for the first time but on the condition the regime first cleans up the black market which comes mainly through the Duty Free system.
What Arab regimes wish to avoid at all costs by opening up the alcohol market is antagonising locals who do not drink and are opposed on religious grounds by needlessly exposing them to alcohol related branding or drunken expats disrespecting local culture. In Saudi this would mean allowing alcohol only at select events, such as Formula 1, while always keeping visibility enclosed so there is no reference to alcohol in marketing or advertising and no visible signage outside the place it is being served. During the Saudi Arabian Grand Prix there was no champagne on the podium and Ferrari driver Carlos Sainz’s personal sponsor Estrella Galicia’s logo on his helmet had to be covered up. (Estrella Galicia is a brand of beer that is manufactured by Hijos de Rivera, a Spanish brewery located in Galicia.)
Besides tourism and a further signal to the West that Saudi Arabia is changing, another obvious benefit to the regime from alcohol legalisation would be increased tax revenue, although this would be offset by the decline of the black market which the regime controls. Complete eradication of the black market, as has been effectively achieved in the UAE, would depend on the level of import taxes. Egypt still has a thriving black market as a result of import taxes as high as 3000% on alcohol because the regime is trying to encourage local alcohol production.
To all our members, the best of the season and a Happy New Year. The newsletter returns 5 January. Our podcast tomorrow features the European Council on Foreign Relations’ Cinzia Bianco with a look back at 2021 and a look forward to 2022. We end this year’s podcasts 31 December with the Conservative MP Crispin Blunt and his efforts to secure justice for Palestinians.