Demand for bootleg alcohol spikes as lockdown drags on
By Sheree Bega and Sameer Naik
Johannesburg - There is little doubt that the demand for illegal alcohol is even greater than the illicit market for cigarettes, says Richard Chelin, a researcher at the Enact organised crime project at the Institute for Security Studies.
“Given the current statistics and new reports, there is no doubt that the illegal alcohol trade is as embedded as the illicit cigarette trade.
“Given that the number of people who consume alcohol is much higher than those who smoke, there is little doubt that the market for demand of alcohol is greater than that of cigarettes. The illegal alcohol trade does present a huge challenge presently.”
Those who are involved in the black market trade include people in the alcohol sector prior to the alcohol ban who are now selling alcohol illegally “trying to make ends meet”.
“On the other hand, there are criminal networks who have capitalised on the alcohol ban to sell alcohol illegally and at exorbitant prices ... Unfortunately, this is often the case when a product is declared illegal or banned and there exists great demand for it.
“This demand will no doubt create a vacuum where criminal networks will venture in and take up the space.
“We have seen it with illegal wildlife products, drugs and cigarettes. Organised crime will more often than not take root once there is a vacuum for any product that is illegal and where great demand exists.”
Prices have soared, he said.
“From people I have spoken to and also from stories on social media, prices have increased exponentially, almost 10 times the normal price.
“Another aspect that is interesting is that people are obtaining alcohol from some places more than others (for example, townships, etc.).
“With regards to cigarette trade, these products are delivered to one’s door after one places an order via WhatsApp.
“There have also been instances whereby individuals who are selling cigarettes are also promoting alcohol.”
Chelin pointed out how there have been instances of unscrupulous individuals capitalising on the demand.
“There have been reports where people have paid exorbitant prices only to realise that they were given vinegar in a bottle of gin, for example. There always exists the danger that individuals buying the products are paying for counterfeit or fake products.
“Another concerning aspect would be the home-made brew (not the traditional pine beer or root beer or umqombothi) but brew that includes toxic ingredients.”
Meanwhile, Business Against Crime SA, says the alcohol and cigarette bans have significantly boosted criminal syndicates in the country.
“Both bans have dramatically boosted the fortunes of criminal syndicates and even seen gangs expanding their activities into these markets as their regular criminal activities have also been disrupted by the lockdown,” said Tebele Luthuli, managing director of Business Against Crime SA.
“The underground cigarette trade was thriving even before lockdown and now they are ‘raking it in’ as surveys have shown that most smokers are continuing to smoke despite the ban on the sale of tobacco products.
Luthuli added that it was impossible to quantify which groups of criminals are profiting the most and how much the illicit trade is worth.
“This is because they operate underground and because they are charging huge premiums over regular market prices.”
However, Bernard Sacks, tax partner at financial services company Mazars, estimates that due to the tobacco ban the SA Revenue Service is losing about R320million a month just in VAT collections alone and he estimates the total loss of tax revenue to be about R1.5 billion a month.
“On the alcohol ban, Sars commissioner Edward Kieswetter last week stated that South Africa lost R82billion in tax revenue just during the first lockdown. If the second ban remains in place for nine weeks, an additional R13billion will be lost to the fiscus.”
“The government desperately needs every cent through tax revenue to curb this scourge and save lives, which will ultimately be used to build the shattered economy once this pandemic is over.”