The South African Liquor Brandowners Association (SALBA) welcomes progress made in its collaboration with the SA Revenue Service (SARS) and SA Police Service (SAPS) to fight tax leakages caused by the illegal alcohol trade.
SARS reported that it seized 152,000 bottles of spirits (12,700 cases) worth R15 million during a joint operation with SAPS in Amersfoort in Mpumalanga last week. The breakthrough in the fight against illegal alcohol trade follows a year-long investigation assisted by the alcohol industry.
Explaining the modus operandi for these crimes, SALBA Chairman Sibani Mngadi said these syndicates purchase products intended for export tax free, as the product would be subjected to duty at the destination country.
“The bottles are then rebranded to conceal that they are meant for export, and resold into the South African market at a competitive rate. A duty free spirit product can undercut a retail price of the duty-paid spirits brand by up to 41%,” said Mngadi.
According to Euromonitor International, the illicit alcohol market has grown to 22% of the total volume of alcohol sold following the bans of alcohol sales with in South Africa. Spirits constitute 48% of the illicit market (mainly through smuggling), followed by homebrews at 24% and sugar-fermented ales at 22%.
SALBA CEO Kurt Moore said it was time Government realized the unintended consequences of blunt policy interventions such as the bans on alcohol sales and current restrictions in trading days and hours.
He said the ongoing restrictions would continue to encourage the illicit alcohol industry and further damage the legitimate enterprises struggling under the weight of these irrational measures.
“To put things into perspective, in 2020 the illicit market was worth R20.5 billion, which is R6.5 billion more than the R14 billion budget that the South African Police Service is allocated for criminal investigations. In 2020 SARS lost R11.3 billion to the illicit alcohol trade– this is R1 billion more than the R10.3 billion allocated for COVID-19 vaccines,” said Moore.
He said SALBA will continue to work with law enforcement agencies in curbing the problem of illicit trade.