“DF-SA Calls for Evidence-Led, Coordinated Response to SA’s Illicit Alcohol Market”
Bizcommunity reports:
“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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Other Articles on the Same Topic
- How Data Blind Spot Undermines Fight Against Illicit Alcohol (Business Day)
- South Africans Got Poorer but Alcohol Consumption Increased, UCT Analysis Finds (IOL)
- South Africa’s Alcohol Tax Battle Puts Illicit Trade Under Scrutiny (The National)
Assessment
The Drinks Federation of South Africa (DF-SA) brings together the country’s dominant alcohol producers – SAB, the local arm of the world’s biggest beer producer AB InBev, the world’s second biggest beer maker Heineken Beverages, the world’s largest liquor producer Diageo and another Big Alcohol Pernod Ricard – alongside trade bodies such as SALBA, Vinpro and the Beer Association of South Africa.
Their press release asks stakeholders to agree on common definitions and “a common evidence base”, and presents the Euromonitor study it paid for as that base:
- an 18% illicit share, a market worth more than R25bn, R16.5bn in excise revenue lost in 2024, and a 55% increase in illicit volumes since 2017.
These are the figures the alcohol industry has cited throughout the Treasury’s consultation on tiered beer excise taxes and a minimum unit price to perpetuate their claims that higher alcohol taxes would drive people to illegal products.
At a media roundtable hosted by the Southern African Alcohol Policy Alliance in South Africa in Johannesburg, Prof. Corné van Walbeek, director of UCT’s Research Unit on the Economics of Excisable Products, set out what the Euromonitor study rests on:
- desk research,
- interviews with 12 stakeholders,
- visits to 57 outlets and
- an online survey of 707 consumers.
These are “inputs” that cannot establish the size of a hidden market or its rate of growth.
Prof. van Walbeek’s unit conducted a thorough analysis of the Treasury’s own revenue data free from conflicts of interest: it contradicts the claim of a rapidly growing illicit market.
Legal, tax-paid alcohol volumes rose 24% between 2017 and 2024, alcohol use per person increased about 8% in a period when South Africans became poorer, and real excise revenue rose steadily across beer, wine and spirits. When illicit trade displaced legal cigarette sales in South Africa, the decline was clearly visible in the legal sales data; nothing similar appears in the alcohol figures.
As The National reported from the roundtable, Prof. van Walbeek said:
We cannot use a number simply because it is widely repeated when the research behind it does not actually establish that number.”
Prof. Corné van Walbeek, director, UCT Research Unit on the Economics of Excisable Products
The DF-SA PR push is a move to shield the commissioned study from that critique. This is repeated alcohol industry lobbying tactic of discrediting the inconvenient truths. It cautions against using growth in recorded sales or excise revenue as a proxy for the illicit market, which is the data source the UCT researchers used, and claims that “measuring illegal activity requires methodologies designed for a hidden market”. The federation also concedes that the 707 consumer survey is not nationally representative.
Its own numbers undercut the warning of a rapidly expanding illicit market: an earlier Euromonitor study, commissioned by SALBA, BASA and Vinpro, put the illicit share at 22% in 2020, four percentage points higher than the new estimate for 2024.
The scare tactic works by steering the tax debate toward focusing on illicit market and away from the legal products that Big Alcohol companies are pushing to sell more of in South Africa. It is the consumption of the products of the companies behind DF-SA where most alcohol harm originates.
At the roundtable, Kashifa Ancer of the DG Murray Trust’s Rethink Your Drink campaign made the case that the existence of an illicit market should not be used to dismiss the role of pricing policies, and set the alcohol industry’s estimated R226 billion contribution to the economy against the estimated R800 billion annual cost of alcohol harm – more than South Africa’s entire national health budget, with people in lower-income groups about 4.5 times more likely to die from alcohol-caused conditions. Illicit production and smuggling already have their own government response in the National Illicit Economy Disruption Programme, which runs through SARS, the police and the Border Management Authority regardless of where excise rates are set.
Commissioned Euromonitor illicit-trade estimates have surfaced wherever alcohol taxation reached the policy agenda: in Brazil, Kenya, Uganda and Mexico. And Movendi International has documented how these reports withhold the methods behind their numbers.
The South African version has already shaped one budget cycle, when sustained alcohol industry lobbying derail a proper alcohol tax increase and led only to a below-inflation excise adjustment in 2026. But the call for common definitions goes a step further: DF-SA is asking for a formal role in building the evidence base, with its own commissioned study as the starting point.
Business Day’s analysis of the dispute concludes that South Africa risks building policy around “a target that keeps moving” because there is no agreed way of measuring the illicit market. The Treasury has its own revenue data, which independent researchers consider the most reliable indicator available, and it is being urged by the alcohol industry to work instead from a commissioned report riddled with conflicts of interest whose findings cannot be verified.
How the Treasury weighs the two will shape the excise review and the alcohol taxation framework that comes out of it.