Cheap booze headache

Ale SA-style is made from fermented sugar, water, flavourings and colorants, says SA Liquor Brand Owners Association CEO Riaan Kruger Sold at about R25/5l, ale has been termed "tik in a bottle" by Western Province finance & economics minister Alan Winde.
Liquor Products Act
Dodgy as it sounds, ale is perfectly legal. The reason, Kruger explains, is that beer is not defined under the (LPA), providing a loophole for moonshine merchants. Ales originated in the Western Cape and are now spreading fast throughout SA, he adds.

"Government is 100% against ales but can take no action until the act [LPA] is amended," says Kruger. Amendments to the LPA which will close the ale loophole by defining beer and creating a sugar fermented beverages category were published for comment in 2012.

Amendments are likely to come into force only in 2014, says Kruger. Until then, the revenue loss to the state on the R500m ale market will run at about R300m/year based on the excise duty of R2,97/l on beer.

Illicit spirits are adding to the liquor industry's and the state's woes. A 2012 study by SA Wine Industry Information & Systems (Sawis) estimated annual revenue loss to legitimate liquor firms at R710m and excise duty loss at R432m.

And it's getting worse. "Since the 20% rise in excise duty in 2012, illegal spirit sales growth has been exponential," says Kruger. Swaziland cane spirit distilleries are believed to be the biggest source of illegal imports, he adds.

Illegal cane spirit is also coloured and flavoured and sold as brandy and whisky, says Kruger. Sawis' study points to a survey by Nielsen which found the lowest-priced "brandy" to be Burnsley, selling at R43,38/l - less than the excise duty on spirits of R48/l.

Combating liquor smuggling is not a task for the faint-hearted. Sawis notes: "Generally smuggling is carried out by large organised criminal syndicates also involved in trafficking drugs, people, arms and tobacco."

Source: Financial Mail