SA's illegal booze market now worth more than R20 billion, study claims

play article
Subscribers can listen to this article
Cops confiscated illegal booze.
Cops confiscated illegal booze.
Fin24 (File)
  • A report by Euromonitor, commissioned by the SA alcohol industry, found that the value of South Africa's illicit alcohol market has now breached R20 billion.
  • One in every 4.54 litres of alcohol sold in South Africa is illegal. 
  • The alcohol sales bans fuelled growth in illicit trade, the report found.

According to a new report - commissioned by the South African alcohol industry - the local trade in illicit alcohol has now reached R20.5 billion, and one in every 4.54 litres of alcohol sold is illegal.

Illicit alcohol includes counterfeit products, where empty bottles of legitimate brands are refilled with cheaper alcohol, as well as unbranded alcohol, smuggled products and illegal homebrewed alcohol which are sold without paying tax. 

South Africa’s illicit alcohol market now makes up 12% of the R177 billion industry and the country’s sales bans during the pandemic have fuelled the trade, says market research firm Euromonitor.

Its report found that the value of South Africa’s illicit alcohol market has been growing at a 17% compound annual growth rate (CAGR) since 2017.   

The report was commissioned by the South African Liquor Brand Owners' Association (SALBA), the Beer Association of South Africa (BASA) and Vinpro.

South Africa’s liquor industry has lamented the losses it suffered during a series of bans imposed by government over the past year to keep hospital beds clear of alcohol-related trauma cases and available for Covid-19 patients.

Biggest problem

Smuggling was the largest form of illicit activity, growing by 13.4% (CAGR) in volume since 2017.

"Smuggled finished products are found in both formal as well as informal markets and tend to mainly include spirits. Smuggling is highly profitable compared to other categories due to ease of access and limited inputs required compared to producing counterfeit alcohol," said the report.

The research firm found that the spike in counterfeiting was driven by cheap raw materials and ease of access to ingredients such as ethanol.

Consumers were also willing to buy illicit alcohol at prices three to four times higher than normal but those who couldn’t afford the steep prices experimented with home brews, which were lethal in some cases.

"Liquor laws and regulations in South Africa largely aim to control licit alcohol manufacturers and suppliers. Industry sources believe that the country has relatively sufficient regulations for the legal market, but minimal punitive measures and lack of enforcement encourages illicit activity," the report found. 

The methodology of Euromonitor’s research included interviews with industry stakeholders such as supply chain managers and fieldwork in nine provinces.

"The report confirmed a clear correlation between the sales ban and the increase in the demand for illicit alcohol. The tragic indirect consequence of this has been the rise in illicit home brew consumption-related deaths and an increase in criminal activities, which are now firmly entrenched," Beer Association CEO Patricia Pillay said.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Show Comments ()
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders