Beware dan­gers of cheap il­licit al­co­hol

Deadly ad­di­tives used to give it a kick can kill the un­wary drinker

Business Day - Business Law and Tax Review - - FRONT PAGE - ROY GILLE­SPIE

THE il­licit al­co­hol in­dus­try in SA poses a huge threat to the le­git­i­mate al­co­hol in­dus­try, as well as to pub­lic health and the gov­ern­ment fis­cus, and as il­licit al­co­hol is not taxed, reg­u­lated or recorded there is lit­tle in­for­ma­tion avail­able on the pat­terns of its con­sump­tion and the re­lated out­comes.

In ad­di­tion to evad­ing ex­cise du­ties and taxes on their prod­ucts, il­licit al­co­hol blenders have lit­tle re­gard for san­i­ta­tion and the safety of con­sumers. Their prod­ucts are of­ten toxic and, if con­sumed in suf­fi­cient quan­tity, can be life-threat­en­ing.

There are also no firm fig­ures on how much il­licit al­co­hol is man­u­fac­tured in the coun­try an­nu­ally. It is es­ti­mated that il­le­gal al­co­hol op­er­a­tors gen­er­ate mil­lions of rands in tax-free rev­enue. These op­er­a­tors are usu­ally di­rectly in­volved in the sourc­ing, man­u­fac­tur­ing, dis­tri­bu­tion and trad­ing of il­le­gal liquor prod­ucts and are of­ten associated with or­gan­ised crime.

Il­licit-al­co­hol op­er­a­tors em­ploy a num­ber of modus operandi, such as:

The use of cane spirit and colourants to re­place grape spirit in the man­u­fac­ture of brandy;

Methanol (a cheap in­dus­trial spirit that can be toxic) to re­place ethanol in the man­u­fac­ture of white spir­its such as gin, cane, and vodka; or

In­ex­pen­sive cane spirit smug­gled into SA from, for ex­am­ple, Swazi­land is used in the man­u­fac­ture of il­licit white spir­its such as gin, cane and vodka.

The il­licit man­u­fac­tur­ers then use this al­co­hol to ei­ther pro­duce their own brands or al­ter­na­tively clone or coun­ter­feit well known le­git­i­mate brands.

How­ever, cloning a well-known brand takes more ef­fort as they have to pro­duce a fairly high-qual­ity al­co­hol and copy the orig­i­nal brand­ing and ma­te­ri­als, such as the la­bels, bot­tles, and bot­tle caps. An­other com­mon way is re­fill­ing old, branded spirit bot­tles, from dumps with the il­licit al­co­hol. The spinoff is that they are then able to sell their il­licit prod­ucts at be­low the cost of the le­git­i­mate brands and avoid hav­ing to pay ex­cise du­ties, which all equates to sub­stan­tial prof­its.

The ex­cise duty payable on a 750ml bot­tle of gin, cane or vodka is R27,27. If you then add the cost of pack­ag­ing, man­u­fac­tur­ing and prod­uct, a bot­tle of al­co­hol will cost about R38 be­fore the whole­sale mark-up. As il­licit al­co­hol man­u­fac­tur­ers do not pay ex­cise du­ties they are able to sell their prod­ucts at be­low the cost prices and dis­trib­ute to le­git­i­mate bot­tle stores and out­lets, of- fer­ing a com­bi­na­tion of both il­licit al­co­hol and le­git­i­mate brands at a dis­counted price, thereby en­tic­ing re­tail­ers to pur­chase their prod­ucts.

Con­sumers need to be wary of ab­nor­mally low-priced prod­ucts as this is one way of iden­ti­fy­ing il­licit prod­ucts. Aside from the in­ex­pen­sive cost, il­licit al­co­hol is usu­ally of a low qual­ity and can pose se­ri­ous health threats. There­fore, be sus­pi­cious of white spir­its on of­fer at be­low R38 a bot­tle. These are of­ten ad­ver­tised as on pro­mo­tion or a spe­cial deal or a loss-leader.

Over the past few months there have been a num­ber of break­throughs in the fight against il­licit liquor op­er­a­tors, with key role-play­ers be­ing ar­rested and fac­ing charges of fraud, evad­ing value-added tax (VAT), ex­cise duty and kite-fly­ing — the un­law­ful gen- er­at­ing of funds in bank ac­counts by means of de­posit­ing stolen or worth­less bills of ex­change. The South African Po­lice Ser­vice (SAPS), work­ing with with the South African Rev­enue Ser­vice (SARS) and the Depart­ment of Agri­cul­ture, have raided nu­mer­ous premises through­out SA and closed down a num­ber of bot­tling plants and con­fis­cated il­licit al­co­hol prod­ucts.

At some of these il­licit al­co­hol op­er­a­tions it was found that con­di­tions were un­ac­cept­able un­der the Food­stuffs, Cos­met­ics and Dis­in­fec­tants Act, 1972, in that most of the bot­tles con­tain­ing ad­di­tives such as colourants and flavourants used in blend­ing the il­licit al­co­hol were be­yond their ex­piry dates, in some cases by sev­eral years. Fur­ther, tar­trazine was con­tained in some of the ad­di­tives but not re­flected on the prod­uct la­bels.

Floor ar­eas and blend­ing drums where the al­co­hol was be­ing man­u­fac­tured were dirty and un­hy­gienic, and un­sealed bags of malic acid and sugar were stored di­rectly on the fac­tory floor, which po­ten­tially could lead to dirt or con­tam­i­na­tion by pests.

With of­fi­cials tak­ing se­ri­ous ac­tion against il­licit al­co­hol trad­ing and high­light­ing the dan­gers that these po­ten­tially lethal prod­ucts pose to the pub­lic there is hope that per­pe­tra­tors will dwin­dle and that con­sumers will refuse to buy cheaper al­co­hol on of­fer, thereby de­creas­ing de­mand for these in­fe­rior and of­ten dan­ger­ous prod­ucts.

Liquor out­lets need to think twice be­fore putting il­licit al­co­hol prod­ucts on their shelves and con­sumers have to be sen­si­tive to the dan­gers of con­sum­ing il­licit al­co­hol prod­ucts.

If the price of your next bot­tle of gin or vodka ap­pears to be too good to be true, it prob­a­bly is.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.