$NZ14 Billion Global Illicit Alcohol Trade Targeted By World Spirits Alliance

Wellington, 21 June 2022

Globally, over 26% of all alcohol is considered illicit, costing the consumer, governments and producers almost $NZ14 billion dollars annually.

“Illicit trade includes alcohol that is smuggled, counterfeit, produced in a way where normal taxes are not paid or is surrogate – i.e not produced for human consumption but diverted into beverage alcohol markets,” said Spirits New Zealand Chief Executive, Robert Brewer.

“Illicit alcohol carries substantial risks and dangers. For consumers, illicit products can present significant health risks, for legitimate businesses it means unfair competition, and for governments, it represents massive fiscal revenue loss,” says Robert.

“And spirits are particularly vulnerable to illicit trade practices because of their high value and because of the disproportionately high excise tax applied to the category compared with beer and wine. This creates considerable incentive for illegal activity where, by dodging tax payments through smuggling or other means, illicit traders can make substantial profits at the rest of our expense.”

In New Zealand Spirits NZ has estimated the loss to government from illegal trade in spirits could be as high as $30 million per annum. And Robert says his members have been working closely with enforcement arms from Customs and the Ministry of Primary Industries to identify illegal practices.

“In fact an importer was recently fined about $150,000 in Auckland for trying to sell over $330,000 worth of spirits which had had their lot codes removed or filed off. Lot codes are used globally to ensure the integrity of the product in the bottle and are usually etched into the glass,” said Robert.

“In the case above the liquid in the bottles was legitimate but the importer stood to gain a significant amount by importing illegal product at low prices and on-selling it at “normal” prices.”

Today saw the World Spirits Alliance release its global roadmap to tackle this important issue which includes cooperation with enforcement agencies, brand protection measures and technical innovation such as the use of ‘smart bottles’. Spirits NZ will continue its efforts to curb this dangerous trade.

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