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Daily Maverick
5 days ago
- Business
- Daily Maverick
Illicit alcohol trade soars to R25.1-billion, posing threat to public health and economy
South Africa is grappling with a burgeoning crisis in the illicit alcohol market, which drains billions in tax revenue and poses serious risks to public health, with nearly one in five drinks sold nationwide being illicit. The Drinks Federation of South Africa has sounded the alarm on the illicit alcohol trade, which is now worth an estimated R25.1-billion and is responsible for R16.5-billion in lost tax revenue in the previous year. 'Illicit alcohol now makes up 18% of the total market — that's nearly one in every five drinks sold,' said Richard Rivett-Carnac, the CEO of South African Breweries (SAB) and chairperson of the Drinks Federation of South Africa. Echoing these concerns, industry experts are calling for a robust response. Jan-Harm Swanepoel, a partner at Adams & Adams, described the illicit alcohol trade as 'organised crime', calling for the full use of legal measures through coordinated and decisive efforts. Health and economic risks Rivett-Carnac stressed that this illegal trade not only threatened public health but also undermined formal businesses and job creation, and called for urgent, coordinated action across the government, industry and enforcement agencies. The illicit alcohol problem is exacerbated by the presence of dangerous substances, as confirmed by recent tests conducted by the University of KwaZulu-Natal. According to the tests, based on findings from the Euromonitor study, nearly 29% of adults know someone who has died from illegal alcohol, while 49% know someone who has been harmed by it. 'Many illegal products contain dangerous substances like methanol, which can cause serious harm,' said Shamal Ramesar, the head of research at the Drinks Federation of South Africa. How to spot illicit alcohol According to Ramesar, consumers and traders can look for several key indicators of illicit alcohol: Suspiciously low pricing, especially for brands priced significantly below market rates. Poor-quality packaging, including misspellings, faded labels, or inconsistent branding. Absence of excise stamps or government-approved labels. Unusual taste or smell, especially in spirits like vodka or gin which may contain improperly diluted ethanol. Unfamiliar brand names, particularly new and unregistered ones appearing frequently in markets or informal outlets. If a bottle seal is broken or doesn't make a cracking sound when opening, it has probably been tampered with. Bottles should have a consistent fill line, while bottles filled in backyard operations often have uneven liquid levels. Presence of particles floating in the liquid (particularly in spirits) indicates probable adulteration (deliberate and secret addition of inferior, harmful, or unauthorised substances to a product). Consumer behaviour Ramesar noted that although 83% of consumers were concerned about the health risks of illicit alcohol, many prioritised affordability and accessibility — especially low-income consumers who often choose illicit products due to cost savings, with illicit alcohol priced up to 70% cheaper than the legal alternatives. The market's widespread availability through informal and formal channels, coupled with shifts during the Covid-19 pandemic from home brewing to large-scale counterfeiting (now representing 31% of illicit volume), reflects an increasingly commercialised and industrial illicit trade. The legal industry's economic weight While illicit alcohol threatens public health and tax revenues, the legal alcohol industry remains a vital economic pillar. In 2022, it contributed more than R226-billion to South Africa's GDP, and supported nearly 500,000 jobs — directly affecting the livelihoods of more than a million people. The alcohol industry also generated close to R97-billion in excise taxes, funding essential public services such as education and housing. This extensive value chain — from producers to retailers and hospitality — stimulates broad economic activity, highlighting the far-reaching consequences of the illicit trade's growth. Counterfeit crisis The success of the legal alcohol industry is being undermined by a counterfeit crisis. The sector is plagued by widespread tax evasion and counterfeit products. 'This is no longer a small problem,' warned Benjamin Rideout, a consultant at Euromonitor International, in a statement released on Tuesday, 1 July 2025. 'Unlike some countries where home brews are the issue, South Africa is facing large-scale counterfeiting — especially in white spirits. The situation demands better control over production inputs like ethanol, and much stronger enforcement,' Rideout said. DM
IOL News
04-07-2025
- Business
- IOL News
Value of illegal booze market continues to grow, but not as fast as the legal sector
A legal shebeen in Alexandra township, Johannesburg Smuggling has dropped from one in three purchases of alcohol to one in every five, a new report by Euromonitor International in conjunction with the Drinks Federation of South Africa has found. Image: Nicola Mawson Fake booze volumes are growing faster than what smugglers are bringing into the country, although the value of sales in the illicit market are not gaining pace as fast as the legal one, with the cost of legal alcohol having been pushed up by price increases. This is according to the latest research from Euromonitor International in conjunction with the Drinks Federation of South Africa (DF-SA). It found that the market for illicit alcohol accounts for a fifth of total alcohol sales in South Africa. 'The drivers of illicit alcohol have changed over the last four years, with counterfeiting growing at the expense of smuggling. Since 2017, the market share for counterfeiting alone has grown from 24% to 31%. Its category value has almost doubled from R4.9 billion in 2017 to R9.8bn 2024,' their report said. In the report, they attributed this to the fact that demand has tapered off since the end of the COVID-19 pandemic and the resultant lockdown that saw sales of alcohol and cigarettes banned, leading to people turning to buying these items from providers who sourced them from over the border. Smuggling has dropped from one in three purchases to one in every five, the research found. 'However, counterfeit and illicit brands have grown substantially since the pandemic, becoming the largest illicit category by volume in 2024,' it said. Richard Rivett-Carnac, South African Breweries CEO and chairman of DF-SA said that the sale of illegal booze is 'not just a public health concern, but a direct threat to fiscal revenues and formal businesses that contribute significantly to the economy and job creation'. The legal alcohol sector supports around one in 31 jobs and generates over R100bn in tax revenue annually, said Rivett-Carnac. 'When illicit traders avoid tax, undercut the market, and exploit vulnerable consumers, we all lose, he said. Illegal booze cost the economy R16.5 billion last year, up from R11.3bn four years previously, when South Africa was in lockdown. The bulk of this amount came from illegal sales of spirits. When Finance Minister Enoch Godongwana presented Budget 3.0 in May, he was faced with a revenue hole of R75bn. The report stated that enforcement continues to be a challenge as both the South African Revenue Service and the South African Police Service 'have reported capacity and resource constraints, especially the illicit trade task team which deals with all illicit goods, not only alcohol'. However, it said that trade sources indicate that the greater involvement by industry in identifying culprits and working together with law enforcement agencies has resulted in positive outcomes. IOL
IOL News
02-07-2025
- IOL News
Liquor Association calls for crackdown on illicit alcohol sales
POLICE discovered equipment used in the manufacturing of illicit alcohol at a house where a 31-year-old man was arrested. Image: Supplied The National Liquor Traders Association (NLT) has intensified its stance against the growing problem of illicit alcohol sales, urging liquor traders to prioritise consumer safety and health. This warning follows the arrest of a 31-year-old man in Mariannhill, west of Durban, who was found in possession of a substantial amount of illicit alcohol, primarily posing as a popular vodka brand. Recent figures from the Drinks Federation of South Africa (DF-SA) highlight a concerning trend, revealing that around 18% of alcohol sold in South Africa is illegal. In the past year alone, an alarming volume of 773,000 hectolitres of illicit alcohol was identified, posing serious risks to public health. NLT spokesperson Lucky Ntimane expressed the urgency of collaborative efforts among liquor traders, communities, and law enforcement agencies to combat this issue. He stressed that the estimated value of illicit alcohol seized during the recent operation—approximately R250,000—underscores the critical need for vigilance and accountability within the industry. THE illicit alcohol in branded vodka bottles valued at around R250 000 that was found at a property in Mariannhill, west of Durban last week. Image: Supplied Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading "This should serve as a wake-up call," Ntimane remarked. "If we work together, we can effectively eliminate the criminals within our ranks and protect our businesses while ensuring that only authentic, safe products reach consumers." His call to action compels liquor traders to stand at the forefront of safeguarding their businesses against illegal practices. Brigadier Jay Naicker of the KwaZulu-Natal SAPS shared details about the operation that led to the arrest. Officers from the Provincial Organised Crime Unit (Narcotics), along with the Provincial Drug and Firearm Unit and the Provincial Counterfeit Goods Unit, acted on intelligence regarding the manufacturing and sale of illicit alcohol. The search of the premises resulted in the arrest of the suspect, who subsequently appeared at the Pinetown Magistrate Court, where his case was remanded pending the completion of the investigation. The issue of illicit alcohol has dominated social media discourse among those who drink with some revealing their suspicion that they've once consumed such without realising it. Some of the consumers expressed that the booze they suspected to be illicit gave them an usually long-lasting and punishing hangover. SUNDAY TRIBUNE
The Citizen
02-07-2025
- Business
- The Citizen
Report reveals 1 in 5 alcoholic drinks are fake: Here's how to spot them
As the problem worsens, so does the concern: Can you really trust what is in your glass? Are you sure your drink is real? A growing number of South Africans are unknowingly drinking fake alcohol. A report by Euromonitor has revealed shocking data about the country's illicit alcohol market. One in five alcoholic drinks contains illicit alcohol, meaning millions may be unknowingly putting their health at risk. This dangerous rise in fake alcohol is a serious threat to people's health and a heavy blow to the economy. Billions of rands are lost each year in tax revenue and legitimate business, as fake alcohol floods the market. As the problem worsens, so does the concern: Can you really trust what is in your glass? Illicit alcoholic drinks impact The Drinks Federation of South Africa (DF-SA) led a panel discussion to explore the findings of the report released in June and how consumers can be protected from fake alcohol. Chairperson of DF-SA and CEO of SAB, Richard Rivett-Carnac, broke down the effects that illegal alcohol has on the country. If billions from public funds are lost due to the growing rate of the illicit alcohol market, jobs in the industry will be lost. 'Understanding the drivers of illicit alcohol growth and its magnitude is a step in the right direction, but we need stronger collaboration with the industry and government to really start removing the incentives that allow for the illicit market to thrive and intensifying enforcement.' ALSO READ: Police seize R1.5m fake alcohol in KZN, one arrested How much illicit alcoholic drinks cost the country Euromonitor's report has revealed that the illicit alcohol market has grown by 55% between 2017 and 2024, a growth rate of 6%, outpacing the growth of the legal alcohol market. The illicit alcohol market is worth an estimated R25.1 billion and has cost the government R16.5 billion in lost tax revenue. Dr Shamal Ramesar, head of research at DF-SA, highlighted that communities are at risk, and the economy is significantly impacted due to this market. 'Recent testing with the University of KwaZulu-Natal found that many illegal products contain dangerous substances like methanol, which can cause serious harm. Unless we shut down illegal producers and educate consumers, lives will continue to be at risk.' Protecting people Acting Commissioner of the National Consumer Commission, Hardin Ratshisusu, said it is important to make people aware of the illicit alcohol market; in doing this, more people will be protected from fake and unsafe products. He highlighted that people have the right to know what they are buying and consuming. 'Tackling this issue takes teamwork through better information-sharing, stronger partnerships, and public education.' To find out how illicit alcohol was distributed and consumed, Euromonitor surveyed the product's prevalence in retail and independent traders, as well as the habits and preferences of consumers. Through desk research, store visits and surveys across multiple geographic and income demographics, Euromonitor illustrated how the illicit trade makes up 18% of the country's overall alcohol market. This 18% amounts to the consumption of 773 000 hectolitres — or 77 million litres a year— with an estimated price tag of R25 billion. ALSO READ: SA loses R30 billion in revenue due to illicit trade in cigarettes and liquor Counterfeiting is a big problem Benjamin Rideout, research consultant at Euromonitor International, stated that illicit alcohol in the country is no longer a minor issue. 'Unlike some countries where homebrews are the issue, South Africa is facing large-scale counterfeiting. The situation demands better control over production inputs like ethanol and much stronger enforcement.' Jan-Harm Swanepoel, Partner at Adams & Adams, highlighted the importance of organised crime in fighting against the problem. 'We have the legal tools to fight, but what is now needed is alignment and action.' Symptoms of poisoning from fake alcohol According to Interpol, the below are the symptoms of poisoning from fake alcohol: Confusion Loss of coordination Vomiting Irregular or slow breathing Blue-tinged or pale skin Low body temperature (hypothermia) Stupor (being conscious but unresponsive) Unconsciousness (passing out). How to spot fake alcohol Think about the '4 Ps': Place: Only buy your alcohol from reputable and licensed retailers, bars, and supermarkets. Do not buy alcohol from unlicensed market traders or from customers in bars. Price: If the product is being sold significantly below its normal price or does not appear to include normal taxes on liquor, then it is likely fake. Packaging: Check for poor-quality packaging, spelling mistakes, and unusually shaped bottles. Look for the contact information and address of the manufacturer. If it is missing, the alcohol is fake. Inspect the seal on the bottle. If the seal is broken or damaged, the contents may have been compromised and are not safe to drink. Check for fake bar codes. If you have an app on your mobile device that scans barcodes, scan it and see if it lists the correct product. Product: Beware of bad smells! If it smells like paint stripper or nail polish remover, then it's likely to be one of these products. If it contains particles or sediment, or the contents have separated in the bottle, then the product is likely to have been thinned with tap water. NOW READ: Budget 3.0: Alcohol and cigarette prices will increase — here's by how much
IOL News
02-07-2025
- IOL News
Counterfeit alcohol trade surges
Gauteng police recently acted on a tip-off, leading to the closure of an illegal alcohol manufacturing facility in Jeppestown. Image: Gauteng SAPS/X The escalating crisis of counterfeit goods in South Africa has intensified calls for urgent measures to combat organised crime, following a series of high-profile arrests linked to illicit alcohol trade syndicates. Recent statistics reveal a staggering 55% increase in illegal alcohol volumes since 2017, prompting officials and activists alike to classify the situation as a national crisis. Last month IOL reported that the Drinks Federation of South Africa (DF-SA) found that the volume of counterfeit alcohol in the country reached 773 000 hectolitres in 2024. This surge has coincided with several police operations aimed at dismantling the networks behind these illegal products after Gauteng police, on Monday, acting on a tip-off conducted a raid in the city centre which led to the closure of an illegal alcohol manufacturing facility in Jeppestown. During this operation, authorities uncovered millions of rands worth of counterfeit alcohol, including fake whiskey, vodka, and gin, as well as counterfeit labels and packaging worth R3.5 million. Colonel Dimakatso Nevhuhulwi of the Gauteng police confirmed that six suspects were arrested, including a man who presented a dubious liquor license from Mpumalanga. "Upon arrival at the said premises, the team was met by a man who claimed to be the owner of the business and further produced a liquor license which was for a Mpumalanga-based establishment. Following a search of the property, the team discovered the manufacturing and production of whiskey, vodka, and gin, including the reprint of counterfeit labels and packaging," stated Nevhuhulwi. At the weekend, police in Bloemfontein in the Free State confirmed the arrest of six foreign nationals after confiscating counterfeit goods valued at more than R19 million during raids in the CBD. Reacting to the raids in the Free State, National police spokesperson, Amanda Van Wyk, revealed that the search and seizure warrants were executed in accordance with the Customs and Excise Act at targeted shops. The arrests in Bloemfontein and Johannesburg were preceded by the arrest of a 31-year-old man who was arrested last week for allegedly manufacturing and illegally distributing counterfeit alcohol at his home in Klaarwater, Mariannhill, west of Durban. During the raid, KZN police confiscated counterfeit vodka with a street value of R250 000, which was found being manufactured at the site. At the time, police spokesperson Captain Carmen Rhynes indicated that members of the provincial organised crime, the provincial drugs and firearm unit, and the provincial counterfeit goods unit were instrumental in the arrest. "Members of the Provincial Organised Crime Unit (Narcotics), assisted by the Provincial Drug and Firearm Unit and the Provincial Counterfeit Goods Unit, acted on intelligence-driven information regarding the manufacturing and illegal distribution of counterfeit alcohol, specifically vodka, in the Klaarwater area in Mariannhill, Durban. They executed a search warrant at the identified premises and a suspect of 31 years of age was found on site and placed immediately under arrest for the contravention of the Liquor Act and the Counterfeit Goods Act," Rhymes said. Reacting to the latest incidents of illicit proliferation of counterfeit booze, anti-crime activist Yusuf Abramjee said that SARS estimates the proliferation of illegal alcohol costs the country's economy over R11 billion in lost annual excise tax revenue. "The illicit alcohol trade is completely unregulated, and apart from the massive revenue losses, this leads to numerous social issues. People are being sold dodgy alcohol that potentially contains fatal ingredients. It isn't regulated, and criminals don't care what they're selling as long as they make a profit. Meanwhile, criminals are stealing the taxes that are meant to pay for vital services such as schools, hospitals, and housing," Abramjee stated. Abramjee has attributed the increase to a lack of stringent law enforcement efforts within and across SA borders, which he said contributes directly to the flows of illicit goods on the back of the recent COVID-19 pandemic which destroyed various industries. "The main problem is the lack of adequate enforcement by authorities and a growing lack of faith in the rule of law. Between 2016 and 2019, just R26 million worth of alcohol was seized by SARS. Since then, the sales bans imposed during the COVID-19 pandemic have entrenched illicit networks. The SA Liquor Board Association (SALBA) estimates that more than one in five bottles sold in SA is illicit. The problem is even worse in the tobacco industry, as illicit cigarettes are even easier to distribute and trade illegally," he added. Cape Times
