DF-SA calls for evidence-led, coordinated response to SA’s illicit alcohol market

Photo by Nettie Lewis on Unsplash

The industry body says the latest Euromonitor International study commissioned by DF-SA provides a comprehensive measure of the illicit alcohol market in South Africa.

According to the study, illicit alcohol accounts for an estimated 18% of alcohol sold in the country, with illicit volumes increasing by 55% since 2017.

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The market is estimated to be worth more than R25bn, while approximately R16.5bn in excise revenue was lost in 2024, according to the research.

DF-SA says the findings reinforce the need for stakeholders to move beyond fragmented responses and develop interventions based on a common evidence base.

Defining the illicit alcohol market

A key part of that process, according to DF-SA, is establishing a consistent definition of what constitutes illicit alcohol.

The organisation defines illicit alcohol as products that are produced, imported, distributed, or sold illegally and do not comply with South African requirements covering taxation, licensing, packaging, labelling, production or safety.

This includes counterfeit and unregistered brands, alcohol trafficking, tax fraud and unregulated self-made alcohol.

Counterfeit products can include fake versions of legitimate brands, illegally refilled or adulterated bottles and products manufactured or packaged to appear genuine. Unregistered alcohol can also include illegally produced spirits manufactured outside the regulated beverage-alcohol system.

Alcohol trafficking encompasses products smuggled across borders, stolen or hijacked in transit, diverted from legitimate supply chains or moved through other illegal channels.

Tax-related illicit activity includes under-reporting or non-declaration of production, product misclassification, and falsification of records to avoid excise duties.

DF-SA also distinguishes between illicit and unrecorded alcohol – two terms it says should not be treated as interchangeable.

While illicit refers to the legal or regulatory status of a product or activity, "unrecorded" refers to whether alcohol is captured in official statistics.

"This distinction matters when comparing different estimates and understanding what individual studies are actually measuring," the federation says.

Legal market growth does not necessarily mean illicit market decline

DF-SA is also cautioning against using growth in recorded alcohol sales or excise revenue as a proxy for a reduction in illicit activity.

Government excise data provide an important measure of the recorded, tax-paid market, but illicit alcohol operates partly or entirely outside that system.

As a result, the legal and illicit markets can expand at the same time.

"Measuring illegal activity requires methodologies designed for a hidden market," DF-SA says, adding that credible estimates should draw on multiple sources rather than relying on a single administrative dataset.

The federation says it welcomes research that contributes to a stronger shared understanding of the market, provided that different studies are compared on a like-for-like basis, taking account of their respective definitions, methodologies, and scope.

Price emerges as a key driver

The Euromonitor research also examined consumer behaviour through a survey of 707 consumers.

While DF-SA notes that the survey is not nationally representative, it says the consumer-level findings provide additional insight into why people purchase illicit alcohol.

Price emerged as a significant factor, with 66% of respondents identifying it as a key driver of illicit alcohol purchasing.

The study found that 72% of respondents reported illicit alcohol being between 10% and 50% cheaper than legal alternatives. Separately, real-world outlet visits found that illicit products could be sold for up to 37% less on average than legitimate products.

The findings point to the role affordability can play in shifting consumer behaviour, particularly when household budgets are under pressure.

The research also highlights a disconnect between awareness and behaviour. While 83% of respondents recognised the health risks associated with illicit alcohol, 67% said they would still purchase it regardless of the product's origin.

For DF-SA, the findings suggest that consumer education alone is unlikely to address the problem if significant price incentives remain.

Industry response focuses on collaboration

The federation's Responsible Trade Task Force (RTTF) brings together industry stakeholders to strengthen the response to illicit alcohol and promote responsible trade.

Its work includes intelligence-sharing, traceability, market surveillance, responsible supply-chain practices, consumer awareness and targeted enforcement.

Technology is also being considered as part of the response, particularly as illicit operators adapt their methods and increasingly sophisticated authentication and supply-chain solutions become necessary.

However, DF-SA argues that technology and industry initiatives cannot solve the problem on their own.

"No single intervention or stakeholder can address illicit alcohol in isolation," the federation says.

Call for a coordinated national response

DF-SA is calling for government, public-health experts, researchers, law enforcement, industry, and other relevant stakeholders to work together to establish common definitions, strengthen the evidence base, and identify practical interventions.

The call comes as South Africa continues to contend with the economic and social consequences of illicit alcohol, including lost tax revenue, risks to consumers, and disruption of legitimate businesses operating within the regulated market.

For the federation, the priority is to connect better measurement with more targeted action.

"A credible response to illicit alcohol must begin with credible evidence," DF-SA says. "It must then translate that evidence into coordinated action that protects consumers, supports responsible trade, and strengthens the integrity of South Africa's alcohol market."