Illicit Trade in Alcohol

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Illicit alcohol trade is widespread, accounting for a substantial share of global alcohol consumption and depriving governments of billions of dollars in tax revenue. World Health Organization estimates indicate that illicit alcohol accounts for 21% of alcohol consumed worldwide — meaning that roughly one in every five alcoholic beverages originates outside the legal, regulated market.​
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Beyond the serious health risks it poses to consumers, illicit alcohol imposes substantial fiscal costs on governments. Euromonitor International’s 2018 study of 24 countries in Latin America, Africa, and Eastern Europe estimated annual government revenue losses from illicit alcohol at US$3.6 billion. Another, more recent 2025 estimate from the World Spirits Alliance places annual lost fiscal revenue from illicit alcohol at US$8.9 billion. For industry, the main impact relates to lost market shares, costs related to intellectual property theft, reputational damage and lost consumer trust. 
​What is Illicit Alcohol?
Illicit trade in alcohol encompasses a wide variety of illegal activity that is typically characterized as:
  • Contraband/Smuggled Alcohol: Alcohol with original branding that has been illegally imported / smuggled into a jurisdiction and sold, evading tariffs/customs. This Includes beverages brought across the border via organized smuggling or in excess of the applicable traveler’s regulated allowance.
  • Counterfeit Alcohol: Fraudulent imitations of legitimate branded products, including refilling, falsification and tampering. These beverages infringe the intellectual property rights of legitimate producers and present brand reputational risk and potential liability. It is often produced in illicit factories and sometimes substitutes lower grade alcohol not intended for human consumption such as denatured ethyl alcohol.
  • Illicit Artisanal: Alcoholic beverages produced following artisanal practices, including home production. Artisanal alcoholic beverages are considered illicit if they are produced for commercial purposes, and if their production and / or sale violate local law.
  • Tax Leakage: Legally produced alcohol beverages on which the required excise tax is not paid in the jurisdiction of production.
  • Non-conforming Alcohol / Surrogate: Products that are not compliant with production processes, guidelines, or labeling legislation. Includes products produced with denatured alcohol or illegal industrial alcohol not produced for human consumption.
Featured reports

​TRACIT Ethanol Control Toolkit

The Ethanol Control Toolkit promotes the use of ethanol control programs as an effective measure for mitigating the production of illicit alcoholic beverages, disrupting illicit alcohol networks and protecting public health. ​
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​Full report and more information here​

​Towards an ASEAN Community: Tackling Illicit Alcohol in Southeast Asia

TRACIT in collaboration with APISWA, EU-ABC and AACS launched a joint report 'Towards an ASEAN Community: Tackling Illicit Alcohol in Southeast Asia' at the EU-ASEAN Business Summit in Siem Reap, Cambodia. This report paves the way to effectively counter illicit trade in alcohol in the ASEAN region.
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​Full Report here

​Prohibition, Illicit Alcohol and Lessons Learned from Lockdown

Written during the COVID-19 pandemic, the purpose of this report was to analyze the economic and social impacts of dry laws beyond public health objectives, specifically those consequences associated with illicit trade. The findings are intended to yield valuable lessons from the experience with COVID19 prohibitions, which can be applied to shaping future policymaking at the intersection of alcohol regulation, illicit trade and public welfare.
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Learn more here

OECD report: Illicit Trade in High-Risk Sectors: Illicit alcohol and implications on public health and criminal network

As part of its ongoing mission to mitigate illicit trade in vulnerable sectors, such as pharmaceuticals, counterfeits and wildlife, the OECD’s Task Force on Countering Illicit Trade undertook an investigation into illicit trade in alcoholic beverages. This report examines the nature and scope of illicit trade in the sector, assesses the impacts of illicit trade on socio-economic development, and identifies the factors driving illicit trade in the sector.
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​TRACIT Press Release | OLAF Event Summary | OECD full report here

TRACIT encourages Laos to improve regulation of alcohol markets, stop consumption of deadly illicit beverages

Illicit alcohol in Laos accounts for 33% of total consumption, significantly exceeding the global average of 25.8%, posing severe health and safety risks. The issue was underscored in November 2024, when six tourists in Vang Vieng died after consuming methanol-tainted alcohol. TRACIT recommends a multi-pronged strategy for the region, including legalizing artisanal alcohol production and strengthening regulatory oversight.​
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See TRACIT Report and recommendations here

​Countering Illicit Alcohol Trade in India

The study assesses the alarming size of the market for illicit alcohol in India and puts forward recommendations designed to help India implement a uniform alcohol policy to address high taxation, fragmented state government policies and a large informal unregulated sector. 
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​TRACIT Press Release | Full Report here

​Illicit Trade in Alcohol in Costa Rica

A review of the market for illicit trade in alcohol in Costa Rica, along with policy recommendations.

Full report in English / Español ​
FEATURED VIDEOS
​Country studies
Reports prepared by Euromonitor International
FEATURED EVENTS

TRACIT presents at ABELAC's Regional Capacity Building Workshop on
​Illicit Alcohol

3 September 2026, - TRACIT Director-General Jeff Hardy joined virtually to present at ABELAC's Regional Capacity Building Workshop on Illicit Alcohol, part of a trilateral collaboration between ABELAC, the Alliance Against Counterfeit Spirits, and TRACIT committed to in Cartagena. Hardy's remarks focused on policy recommendations for strengthening controls on illicit alcohol across the region. The workshop was designed to build a common technical language and stronger advocacy through peer-to-peer learning among trade associations, drawing on TRACIT's and AACS's expertise, with digital marketplaces highlighted as a fast-emerging regional front for illicit trade.

TRACIT Director-General addresses South Africa's National Treasury on alcohol excise reform

27 August 2026, South Africa - TRACIT Director-General Jeffrey Hardy was invited by South Africa's National Treasury to share views at their alcohol tax review workshop. Hardy explained that South Africa's average excise burden on alcohol (beer and spirits) is already more than 20% higher than the global average, and noted that countries with similarly high excise rates tend to have very large illicit alcohol markets. He encouraged the Treasury to avoid further increases in excise taxes on alcohol, and, if necessary, to adopt a predictable, evidence-based excise framework that protects the integrity of the legal market. He also emphasized that any changes to excise taxes should be paired with enhanced enforcement, including joint SARS–SAPS operations and improved customs controls.
Read TRACIT’s submission
Read the Sunday Times article

TRACIT hosts panel on securing the Americas' alcohol market at Third Illicit Trade Summit in Brazil

16 April 2026, Rio de Janeiro - During the Third Combating Illicit Trade Summit of Customs Directors-General, Americas Region, TRACIT Director-General Jeffrey Hardy moderated a panel on illicit trade in alcohol, examining threats to consumer health, fiscal revenue, market integrity, and intellectual property across the region. Panelists included Carlos Lima, President of the Instituto Brasileiro da Cachaça; David Francis, Managing Director at the Alliance Against Counterfeit Spirits; and Isaac Morales, Senior Advisor of the Latin American and Caribbean Spirits Alliance, with discussants representing customs authorities from Trinidad and Tobago, Ecuador, and the Dominican Republic.

TRACIT meets with Brazilian officials on ethanol controls and e-commerce enforcement

15 October 2025, Brasília - During a visit to Brazil, TRACIT Director General Jeff Hardy met with several government officials to address problems associated with illicit alcohol, including Senator Nelsinho Trad, who agreed with TRACIT's suggestion to focus on the ethanol supply chain rather than imposing an additional tax as a response. The discussion also covered implementation of TRACIT's Ethanol Control Toolkit. Hardy later met with Paulo Pereira, National Secretary of Consumer Affairs at the Ministry of Justice, to discuss controls on e-commerce in Brazil. TRACIT was invited to participate in a task force examining tighter controls on e-commerce platforms in Brazil and the region.

​TRACIT and industry partners sign Joint Statement to counter illicit alcohol trade in Latin America and the Caribbean

9 April 2025, Cartagena - TRACIT, joined by the Alliance Against Counterfeit Spirits (AACS), the Distilled Spirits Alliance of Latin America and the Caribbean (ABELAC), and Colombia's Prolicores, signed a Joint Statement committing to strengthen the fight against illicit trade in alcohol and counterfeit spirits across Latin America and the Caribbean. Building on the momentum of the Second Combating Illicit Trade Summit of Customs Directors-General, Americas Region, the organizations committed to sharing information with national authorities and supporting regional capacity-building, and announced plans for a webinar on countering illicit alcohol trade for customs officials and national authorities in the region.

TRACIT encourages LATAM governments to tighten controls on ethanol for illegal use

3 July 2024, Santa Cruz, Bolivia - During the 9th Congress of the Alianze Latinoamericana Anticontrabando (ALAC), Esteban Giudici, TRACIT Director of Programs presented to delegates an overview of TRACIT's Ethanol Control Toolkit. He explained that the diversion of ethanol for illegal use in the alcoholic beverage sector can happen in developed and developing countries. He urged government officials throughout the region to tighten controls on the ethanol supply chain.

TRACIT presents report to OECD Working Party on Countering Illicit Trade

5 April 2024, Paris - During a session on securing supply chains from illicit trade, Monica Ramirez, Global Director, Corporate Affairs at Anheuser-Busch InBev, provided OECD delegates with an overview of TRACIT's Ethanol Control Toolkit.  She explained that the diversion of ethanol for illegal use in the alcoholic beverage sector can happen in developed and developing countries. She urged government officials to tighten controls on the ethanol supply chain and offered to brief national governments and intergovernmental agencies on how to implement the best practices delineated in the Toolkit. 

TRACIT presents Ethanol Control Toolkit to Illicit Trade Summit of Customs Directors-General, Americas Region

27 March 2024, Panama City - Today TRACIT presented findings from its latest report, the Ethanol Control Toolkit, which promotes the use of ethanol control programs as an effective measure to counter illicit trade in alcohol. During the Summit, Monica Ramirez, Global Director, Corporate Affairs at Anheuser-Busch InBev presented the report to 25 Customs Directors-General, urging them to legislate and enforce ethanol control measures to mitigate the production of illicit alcoholic beverages, disrupt illicit alcohol networks and protect public health.

TRACIT co-hosts high-level conference on illicit alcohol in India

19 September 2019, New Delhi - The high-level conference "Don't Peg on Poison: Perils of Illicit Alcohol in India" was co-hosted by TRACIT, Anheuser-Busch InBev, and The Quint. TRACIT presented policy recommendations from its report, Illicit Trade in Alcohol in India: Challenges and Solutions, to government officials, industry experts, and consumer interest groups gathered to address a fragmented regulatory system that has fostered markets for dangerous, illicit alcohol. ​Learn more about the conference here

TRACIT presents global report on illicit alcohol at National Press Club

5 November 2018, Washington, D.C. - At the National Press Club, TRACIT promoted a newly published Euromonitor International report on the global illicit alcohol market, compiling findings from 24 countries across Africa, Eastern Europe, and Latin America. The study found that approximately 26% of total alcohol consumption in these markets is illicit, costing governments as much as US$3.6 billion annually in lost tax revenue. TRACIT Director-General Jeffrey Hardy called the findings confirmation that "illicit trade in alcohol is a widespread problem that must be addressed by policy makers worldwide," noting the health, development, and security risks posed by illicit alcohol products. Learn more here

Learn how illicit alcohol impacts the achievement of the UN Sustainable Development Goals
From  smuggling, counterfeiting and tax evasion, to the illegal sale or possession of goods, services, humans and wildlife, illicit trade is compromising the attainment of the UN SDGs in significant ways, crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives. 

The TRACIT report Mapping the Impact of Illicit Trade on the Sustainable Development Goals investigates illicit trade in 12 key sectors that participate significantly in international trade and are most vulnerable to illicit trade. For each sector, the negative impacts of illicit trade are mapped against the 17 UN SDGs. ​The full report is available here.

Read the chapter: SDGs and illicit trade in alcohol

WHAT ARE THE RISKS ASSOCIATED WITH ILLICIT ALCOHOL?
​CONSUMERS
Serious health risks, including death and blindness.
GOVERNMENTS
Loss in fiscal income due to unpaid taxes and health expenses. Large pool of value for governments from fiscal loss from illicit alcohol.
BUSINESSES 
Licit business lose opportunities to illicit market. Licit brands degraded.
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Transnational Alliance to Combat Illicit Trade (TRACIT) is an independent, non-governmental, not-for-profit organisation under US tax code 501(c)(6).
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