Fake liquor cost lives and the economy

The Diageo plant in Isipingo. Picture: Doctor Ngcobo

The Diageo plant in Isipingo. Picture: Doctor Ngcobo

Published Nov 26, 2023


Durban — Drinking illegally manufactured alcohol will likely result in your suffering blindness or joining thousands who have died around the world because of poisonous ingredients used to make fake alcohol.

This was a warning from alcohol experts following revelations that the black market was making an estimated R23.4 billion a year through the manufacturing and selling of illegal spirits.

Diageo SA Corporate Relations Director Sibani Mngadi also warned that such products were putting job security at risk across the liquor industry as they reduced consumer confidence in some of its much favoured brands. Implications of consuming illegal spirits were severe as they contain “very high amounts of ethanol, which increases the risk of poisoning.”

“One of the most common is methanol, a form of alcohol that may be added to some illicit beverages to make them stronger. It causes blindness and other health problems and is often lethal. Also, some drinks are contaminated during production with toxic chemicals and products that may be added to speed up fermentation,” said Mngadi.

Mngadi also raised concerns about the taxman losing about R8.5 billion, which should have been collected as sin tax annually as illegal liquor distributors were not tax compliant.

“The biggest threat of illicit and counterfeit liquor to the industry is the role they play in decreasing the levels of confidence consumers have in certain products, which directly leads to declines in profits, which invariably results in job losses,” said Mngadi.

He said the 2023 Euromonitor Consulting report had revealed that approximately 32% of the overall legitimate spirits had fallen victims of counterfeit. In his mid-term budget statement earlier this month, Finance Minister Enoch Godongwana confirmed that the state had suffered a R3.7 billion shortfall in excise tax for alcohol and tobacco of which 13% of this were lower than expected tax revenue from spirits.

“Part of the uncollected taxes would be due to consumers moving to non-tax paying illicit and counterfeit products,” said Mngadi.

Most of these illegal products came into the market in huge numbers to replace legitimate alcohol, which had been banned in 2020 to control the spread of Covid-19.

Mngadi said the industry was working closely with the South African Revenue Service and police to put a stop to illicit and counterfeit spirits.

But he said there was a need for a more strategic relationship to deal with the problem in a much more systematic way.

“Each company has tried to invest more in brand protection. These are people who look at information available and try to follow trends and help the authorities to close in on what is suspected to be huge operations across the country,” he said.

According to a report compiled and released by Charles Parry, the director of the South African Medical Research Council (SAMRC)’s director for alcohol, tobacco and other drug research unit, in September last year, South Africa was among countries who had between 15 and 20% consumption of unregistered alcohol. Parry said the fact that unregistered liquor was cheaper was more of a health risk because people drink more than they would if the products were sold at market price.

“They often have no, or irregular, labelling and contain alcohol of unknown strength and they often have higher alcohol by volume (ABV) than recorded products, and of poor production standards and in some cases contain contaminating toxins such as methanol,” read the report.

Sunday Tribune