Illicit liquor: What you see is not what you getFollow @MadeItInAfrica
“This stuff will make you blind”, warned a British shopkeeper when he sold a bottle of cheap vodka to a student from Sheffield, last December. True to his prophecy, after partying on the vodka, she woke up with blurred vision the next morning. Months later she was still suffering from impaired vision.
World-wide the high demand for cheap alcohol has fuelled an illegal liquor industry that is hugely problematic for governments and legitimate stakeholders in the liquor industry.
Loraine Stander tried to get the facts behind the illegal liquor trade, loss of revenue, the eroding of brand names and the associated health risks.
What is illicit liquor?
It is a trade that goes by many names: counterfeit liquor, illegal liquor, fake alcohol, moonshine, bootleg, etc. It is liquor that is produced, for sale, under unlicensed and unregulated circumstances. This can be produced in small backyard operations or on an industrial scale by internationally organised syndicates. The latter are often also involved in drugs and other forms of organised crime. Illegal manufacturers produce counterfeits of well-known brands; produce their own brands; dilute spirits and wines and produce all sorts of concoctions laced with alcohol. These products can be sold privately or land up in retail outlets or taverns where it is sold to unsuspecting consumers. It is also often the case that customers are aware that they are drinking illegal liquor.
These products are cheaper because unregulated production is lower and excise duties and import tariffs are not paid.
It is all about the brand. Luxury liquor brands, for example certain Scotch whiskies, have with effort and money built up over time reputations as quality products. This combined with innovative advertising that link the products to sought-after lifestyles have created covetable products. These brands are valued by connoisseurs in the poshest drinking holes in the world or in private homes, but also in lowly taverns by those that aspire to the associated lifestyle.
These brands have huge monetary value. Johnnie Walker whisky is the top drinks brand for 2012 with a brand value of $2,432m.
To protect these brands against a counterfeit product is paramount. It is for this purpose that the spirits industry founded in 1993 the International Federation of Spirits Producers (IFSP). Its membership comprises nine of the world’s leading spirit groups and they are involved in 30 countries. According to the IFSP: “Counterfeit poses a growing threat to everyone involved with spirits … Retailers and bar owners lose business when counterfeit spirits are uncovered. Forgeries seriously erode a premium brand’s credentials, endangering the livelihood of those who make and market it and the investment of their shareholders.” They claim that in 2011 more than 420 counterfeit-production and -distribution facilities were closed down. “If these facilities had continued to operate, they would have produced around 730,000 cases of counterfeit spirits during the year, diverting well over a $100m of revenue away from the spirits industry and tax authorities into criminal hands.”
Inexplicably the IFSP does not operate in Africa. Enquiries by How we made it in Africa received no response.
How we made it in Africa approached one of the leading alcohol beverage companies in South Africa, who has many of the luxury labels in their stable, to get more information on brand protection. We quickly realised that no concrete information on anti-counterfeit operations would be forthcoming. Luxury brands are extremely reluctant to admit or make public that the brand that they have so carefully built up can be fraudulent. Talking to the media can put the lives of brand protection agents under serious risk and also jeopardize possible breakthrough by the police or their agents.
Last December 170 people died in West Bengal (India) after drinking alcohol that had been mixed with toxic methanol.