Alcohol

Illicit Trade in Alcohol

Illicit trade in alcohol is widespread, representing significant percentages of alcohol consumption worldwide and stripping governments of billions of dollars in tax revenues. According to Euromonitor’s 2018 Global Study on Illicit Alcohol, 1 in 4 alcohol bottles are illicit, representing 25.8% of all global consumption.

In addition to the serious health risk for consumers, the illicit trade in alcohol results in substantial losses in tax and duty revenue for governments. According to the Euromonitor report, the fiscal loss to governments in these countries is as much US$ 3.6 billion every year. These findings correspond to a 2016 report by the EU Intellectual Property Office that estimated counterfeit spirits and wine drain €1.2 billion (US$1.4 billion) in government revenues in Europe, of which €739 million (US$843 million) are excise duties. For industry, the main impact relates to lost market shares, costs related to intellectual property theft, reputational damage and lost consumer trust.

FEATURED REPORTS

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.

Full report and more information here

Countering Illicit Alcohol Trade in India: Challenges and Solutions

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.

TRACIT Press Release | Report in PDF

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.

Learn more

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.

Media Release (English) | Media Release (Cambodian) | Full Report (PDF)

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.
TRACIT Press Release | OLAF Event Summary | OECD report in PDF format

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 / Espanol

Other studies on illicit trade in alcohol

Size and Shape of the Global Illicit Alcohol Market

Illicit Alcohol Meta Study

Global Illicit Alcohol in a Nutshell

Country studies
Reports prepared by Euromonitor International

Argentina, 2014 (Spanish)
Bolivia, 2017 (Spanish)
Colombia, Ecuador, El Salvador, Honduras, Panama and Peru, 2016
Colombia, Ecuador and Peru, 2018 (Spanish)
Czech Republic, 2015
Dominican Republic, 2017
Guatemala, 2016 (Spanish)
Malawi, 2016
Mexico, 2021
Paraguay, 2018 (Spanish)
Russia, 2015
Sub-Saharan Africa, 2018

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

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.

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 EVENTS

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.

Esteban Giudici, Director of Programs, TRACIT

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.

Monica Ramirez, Global Director, Corporate Affairs, Anheuser-Busch InBev

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.