South Africa’s illicit alcohol trade has grown into a vast underground economy that is draining billions from the fiscus while exposing consumers to serious health risks.
In fact, the country’s illicit alcohol trade has ballooned into a R25.1 billion underground industry, with repercussions that extend far beyond the sale of cheap liquor.
Research by Euromonitor International, released in the middle of last year, showed that illegal alcohol now makes up about 18% of all alcohol sold nationally.
This figure has surged despite the post-Covid recovery of the legal market.
The scale of the shadow market
And the consequences are dire. Organised crime grows as it gains a source of funding: officials are captured, people die, and violent crime increases.
The volume of illicit alcohol has risen by roughly 55% since 2017, reaching around 773,000 hectolitres in 2024.
This translates to nearly one in five alcoholic drinks consumed in South Africa being sourced on the black market.
To put that into perspective, the Drinks Federation of South Africa (DF-SA) has said that this volume would equate to every adult South African, over the legal drinking age, consuming the equivalent of 750ml of beer per week, every year.
Another way of looking at it is that this amount of booze is enough to fill around 1,600 average-sized pools.
From a fiscal perspective, the growth of illegal alcohol represents a major loss to the National Treasury, DF-SA said, based on Euromonitor International’s study.
In 2024 alone, the country lost an estimated R16.5 billion in tax revenue due to illegal booze – money that would otherwise fund public services such as healthcare, education and infrastructure, DF-SA said.
Lockdown’s unintended legacy
That’s up from R11.3 billion when South Africa was in lockdown as a direct result of President Cyril Ramaphosa’s bid to inhibit the spread of the disease. Among the unintended consequences of lockdown, Euromonitor International also found in a separate report was that the ban on booze sales led to a flourishing underground market.
“The ban on licit alcohol sales, coupled with preexisting drivers, resulted in a rise in illicit activities,” it said. It noted that empirical evidence suggested that smuggling operations were the fastest-growing category in volume terms in 2020, thanks to high profit margins for spirits.
Homebrew saw increases in experimentation as well as selling amid increased demand for alcohol during the dry sales ban, said Euromonitor International. Production of cheap counterfeit brands and unbranded alcohol, especially of spirits, also saw higher demand in 2020, it added.
Richard Rivett-Carnac, South African Breweries CEO and chairman of DF-SA, has said that the sale of illegal booze is “not just a public health concern, but a direct threat to fiscal revenues and formal businesses that contribute significantly to the economy and job creation”.
The legal alcohol sector supports around one in 31 jobs and generates over R100 billion in tax revenue annually, said Rivett-Carnac. “When illicit traders avoid tax, undercut the market, and exploit vulnerable consumers, we all lose,” he said.
Counterfeit spirits, particularly low-cost white spirits that are easier to fake, account for a significant portion of these losses, the association said. In 2021, following the Covid-19 lockdown in the previous year, Euromonitor International found that homebrewed alcohol led to several deaths.
The deadly cost
“Rising demand for homebrew during the months of the lockdown, coupled with increased production and selling contributed to the rise in illicit activities… Homebrews are often not produced in sanitary conditions and in some cases may contain lethal additives to strengthen the alcohol content,” said Euromonitor International in its 2021 report.
Health concerns continue to be a serious issue, with DF-SA stating that 80% of the 707 respondents worry about health risks from unregulated alcohol. Nearly half say they personally know someone harmed by illegal products, and at least 29% know someone who died after consuming such alcohol.
The consequences are not abstract. previously reported that, in August 2024, four farmworkers in the Stellenbosch area died after drinking what was believed to be compromised illicit alcohol – a grim reminder of the human cost of this trade.
A call to action
Industry groups and stakeholders have repeatedly warned that illicit alcohol undermines both public health and economic stability. DF-SA head of research Dr Shamal Ramesar said the research findings were a “wake-up call”, urging government, law enforcement and industry to act in concert to disrupt illegal production and protect communities.
“Communities are being exposed to harmful, unregulated alcohol, and the country is losing billions in revenue. It is urgent that government, industry, and civil society work together to tackle this issue head-on.”
The illicit trade also benefits organised criminal networks, diverting money away from the formal economy while placing additional strain on already stretched law enforcement agencies.
The criminal connection
reported previously that enforcement bodies face capacity constraints in tracking and dismantling illegal production and distribution networks operating across provinces.
Compounding these challenges, enforcement agencies struggle to tackle illicit networks that span production, smuggling and distribution.
The Beer Association of South Africa has said that the illicit alcohol trade in South Africa fuels organised crime.
Research shows that the illicit alcohol trade is often linked with other forms of organised crime, such as drug dealing, theft, and the use of undocumented labour, creating a nexus of criminal activity.
Moreover, the scale of the illicit market encourages corruption among law enforcement and government officials, who may be “captured” by these syndicates, further weakening enforcement efforts.
As South Africa continues to grapple with the twin challenges of economic inequality and public health, the illicit alcohol trade represents a growing crisis that drains vital public revenues and puts lives at risk.
BUSINESS
