The rising tide of illicit alcohol trade poses a grave challenge, not just for law enforcement but for the very fabric of the economy.
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Illicit alcohol is often seen as a law enforcement issue. But the data says it is a signal of economic pressure, evolving criminal activity, and gaps in how markets are regulated and enforced.
At the recent EMEA Security Conference in Cape Town, one message stood out clearly: illicit trade is no longer isolated or informal. It is co-ordinated, cross-border, and increasingly moving through mainstream channels.
In South Africa, the scale is significant. Euromonitor International research shows that illicit alcohol has grown by more than 55% since 2017 and now makes up around 18% of the market. This translates into an estimated R16.5 billion in lost excise revenue in 2024 alone.
Illicit trade is increasingly recognised as an economic issue, with implications for revenue collection, lawful business activity, and the stability of regulated markets.
Recent policy discussions and enforcement priorities have placed greater emphasis on disrupting illicit trade through co-ordinated, intelligence-led approaches. The SA 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 co-ordinated response.
To understand the issue, it is important to distinguish between illicit and counterfeit alcohol.
Illicit alcohol refers to products produced, distributed, or sold outside the legal system, including alcohol brought in without paying taxes, smuggled goods, and stock diverted from regulated channels. Many products are legitimate alcohol entering the market through unlawful means.
Counterfeit alcohol 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. Research shows that illicit and counterfeit products are, on average, around 37% cheaper than legitimate alternatives, and sometimes significantly lower. Where households are under pressure, this price gap influences purchasing decisions.
This price difference exists because illicit products bypass systems applying to legal products — including taxation, compliance requirements, and quality controls.
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 sectors from agriculture and manufacturing to retail and hospitality.
Public awareness 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. As long as demand remains and illicit trade remains profitable, supply will continue to adapt.
This is where co-ordination 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 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 co-ordination 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 co-ordinated 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, co-ordinated, and informed by data.
Dr Shamal Ramasar is Head of Research at the Drinks Federation of South Africa.