Counterfeit bottles of a popular vodka brand and other illicit goods seized during a joint operation by the Hawks at a property in Umlazi, Durban. The proliferation of illicit alcohol not only poses serious health risks to consumers but also erodes the tax base, as producers operate outside the regulatory and excise system, argues the writer.
Image: Durban Metro Police / Facebook
Illicit alcohol is often seen as a law enforcement issue. But the data tells a broader story. It is a signal of economic pressure, evolving criminal activity, and gaps in how markets are regulated and enforced. This was a key takeaway from the recent EMEA Security Conference in Cape Town.
One message stood out clearly: illicit trade is no longer isolated or informal. It is coordinated, cross-border, and increasingly moving through mainstream channels. In South Africa, the scale is significant.
Research by Euromonitor International shows that illicit alcohol has grown by more than 55% since 2017 and now makes up around 18% of the total market. This translates into an estimated R16.5 billion in lost excise revenue in 2024 alone.
This is no longer just an industry concern. Illicit trade is increasingly recognised as an economic issue, with implications for revenue collection, lawful business activity, and the stability of regulated markets.
Government is beginning to respond more decisively. Recent policy discussions and enforcement priorities have placed greater emphasis on disrupting illicit trade through coordinated, intelligence-led approaches.
The South African Revenue Service (SARS) has also signalled a stronger focus on non-compliance across tax and customs systems, pointing to a more sustained enforcement drive.
This shift reflects a growing understanding: illicit trade is not simply a compliance problem. It is a structural issue that requires a broader, more coordinated response. To understand the issue, it is important to distinguish between illicit and counterfeit alcohol.
Illicit alcohol refers to products that are produced, distributed, or sold outside the legal system. This includes alcohol brought into the country without paying the required taxes, smuggled goods, and stock diverted away from regulated channels. Many of these products are legitimate alcohol that has entered the market through unlawful means.
Counterfeit alcohol is a subset of illicit alcohol. It involves the imitation of recognised brands through fake packaging and labelling. In some cases, the contents may also be altered or substituted. In simple terms: not all illicit alcohol is counterfeit, but all counterfeit alcohol is illicit. A key driver behind illicit alcohol is price.
Euromonitor research shows that illicit and counterfeit products are, on average, around 37% cheaper than legitimate alternatives, with some instances significantly lower. In a constrained economic environment, where households are under pressure, this price gap plays a major role in purchasing decisions.
Illicit alcohol in South Africa has evolved beyond a policing concern into a clear indicator of economic strain, regulatory gaps and increasingly sophisticated organised trade. Now accounting for a significant share of the market and costing the fiscus an estimated R16.5 billion in lost revenue, its growth reflects both consumer pressure and systemic weaknesses. This piece argues that meaningful intervention will require coordinated, intelligence-led collaboration between government, industry and enforcement to restore market integrity and curb the expansion of illicit networks.
Image: Nicola Mawson | IOL
This price difference exists because illicit products bypass the systems that apply to legal products, including taxation, compliance requirements, and quality controls. What appears to be a saving at the point of purchase reflects a broader shift away from regulated systems. Illicit trade is also becoming more sophisticated.
Organised networks are adapting quickly, scaling supply chains, and expanding distribution. Increasingly, illicit products are not only found in informal settings but are moving through formal retail and logistics systems, making them harder to detect.
The impact is felt across the economy. Illicit alcohol reduces tax revenue, weakens legitimate businesses, and shifts value into unlawful networks. It affects multiple sectors, from agriculture and manufacturing to retail and hospitality.
Public awareness of this issue is also growing. There is increasing recognition that illicit trade is linked to broader economic pressures and the challenges faced by regulated industries. Addressing this issue requires more than enforcement alone.
As long as demand remains and illicit trade remains profitable, supply will continue to adapt. This is where coordination becomes critical. Stronger data-sharing, improved traceability, and closer alignment between industry, government, and enforcement agencies are essential.
These approaches help build a clearer picture of how illicit markets operate and where interventions are most effective. As highlighted at the EMEA Security Conference, there is a clear shift toward more structured collaboration.
One example of this is the Responsible Trade Task Force, an alcohol industry-led initiative focused on strengthening coordination across the value chain. The Task Force brings together producers, distributors, and retail partners to identify risks, share insights, and support practical interventions on the ground.
This includes improving visibility across supply chains, strengthening compliance at the point of sale, and enabling more consistent reporting of suspicious or non-compliant activity. Importantly, the aim is not to duplicate enforcement, but to better align industry efforts with regulatory and law enforcement priorities.
By creating a more coordinated and informed approach, the Task Force supports a more effective response to illicit trade at scale. Ultimately, illicit alcohol is not just about the product itself. It reflects where systems are under pressure and where gaps exist.
Every purchase, every transaction, and every point of distribution either supports the regulated market or works against it. If the goal is a more stable and sustainable system, then the response must be equally aligned, coordinated, and informed by data.
(Dr Ramesar is Head of Research, Drinks Federation of South Africa (DF-SA). His views do not necessarily reflect those of the Sunday Tribune or IOL)
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Dr Shamal Ramesar, head of research, Drinks Federation of South Africa.
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