Buying illicit booze helps criminals, hurts jobs

Hijackers and cross-border smugglers are scoring from the trade in illegal alcohol in SA, and the fiscus, which uses taxes from legal operators to fund service delivery to citizens, is losing out.

Appealing to consumers not to support the illicit trade, the liquor industry - which took a hard knock when booze was banned during the Covid lockdown - has outlined how illicit stock is entering the country, and how to spot it.

“The increasing illicit trade in alcohol represents a serious threat to the SA economy due to the loss of taxation, including VAT and excise, as well as jobs contributed by legal alcohol producers and merchants to the fiscus,” says the SA Liquor Brand Owners’ Association.

Kurt Moore, its CEO, said illegal products were entering SA in five ways:

1. Border smuggling – alcohol imports are smuggled through the border, allowing the goods through without the payment of any border taxes. Moore says this problem is particularly common at harbours as points of entry.
2. Round-tripping and diversion – duty-free product meant for export is sold in the local market. This illegally obtained alcohol is then sold at prices lower than market value.
3. Counterfeit products – this is a relatively small occurrence compared to the first two entry points outlined above. In this case, criminals attempt to produce cheaper knock-offs of popular alcohol brands.
4. Hijackings – this means of unlawfully obtaining product while in transit has increased substantially during the Covid-19 pandemic, says Moore.
5. Armed robberies of liquor stores and manufacturers – he says these incidences have also increased, with about 400 robberies reported during the lockdown.

“Inadequate prosecutions of offenders, porous borders and corruption are just some of the problems that led to illicit alcohol flooding the market and continue to agitate the situation,” Moore says.

How to spot illicit alcohol:

• Place – only buy alcohol from a reputable store or manufacturer.
• Price – illegal alcohol is often sold at below market prices. These prices are low for one of two reasons: either the alcohol was smuggled into the country illegally without paying taxes, or it has been stolen through a criminal act like a hijacking. Prices can be up to 50% cheaper.
• Packaging – Look carefully at the label for duller and less accurate paint work. Bottle tops are often made of inferior material and tend to bend or crumple on opening. Be wary of loose bottle tops and broken seals as this indicates a product that has been tampered with or is an inferior product. Also look out for products marked for export, as these are not meant to be sold on the local market.
• Product - Examine the bottle. Look out for fake versions that sport misspelt names of popular brands as well as products which display alcohol content not compliant with the 43% ABV content prescribed for certain spirits, by the Liquor Products Act.

“Organised crime targets every level within the value chain. If the demand is reduced through effective governance and responsible consumerism, the impact can be dramatically reduced, and job losses can be avoided,” says Moore.

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