By The Transnational Alliance to Combat Illicit Trade (TRACIT)

With inflation at its highest levels since 2008, the international economy finds itself amid a cost of-living crisis. In many countries, inflation has reached multi-decade highs, with both headline and core inflation continuing to rise and broaden beyond food and energy prices. Inflation has also been intensified by post-COVID economics and the Russian invasion of Ukraine – both of which have driven global commodity prices higher. Among the cascading effects of inflation on the global economy is the negative impact it has on the market dynamics that drive illicit trade. Specifically, high levels of inflation can have a disastrous impact on consumer purchasing power. In turn, reduced purchasing power coupled with increased poverty reduces consumer “product affordability,” which is widely regarded as the primary driver for illicit trade. When prices rise faster than incomes, people can afford to buy fewer goods and services and cheaper goods including illicit and black-market products become more tempting. Given these dynamics, where inflation incentivizes consumers to choose cheaper, illicit alternatives, governments will necessarily need to be more vigilant in their efforts to defend their economies from illicit trade. In this light, Turkiye presents a valuable opportunity to raise awareness on the relationship between inflation and growth in illicit trade. proTurkiye is experiencing high inflation rates. In October 2022, inflation climbed to a 25-year high of 85.5 %. Consequently, the impacts of soaring inflation leading to price increases have created a notable erosion of consumer purchasing power in Turkiye. Turkiye already faces challenges from illicit trade on multiple fronts. For example, it is an important source country for illicit plant protection products, counterfeit goods are widespread, and the country grapples with the harmful effects of illicit tobacco, alcohol and petroleum products. Moreover, the government’s goal of making Turkiye a top pharma hub by 2023 is threatened by a lucrative market for illegal pharmaceuticals. This situation is exacerbated by Turkiye’s location in the region, which makes it a key transit hub for both complete counterfeit products and counterfeit components. In principle and practice, the challenge of product “affordability” is a long-standing driver for illicit trade. Keeping that in mind, inflation amplifies a problem that usually already exists. In Turkiye’s case, inflation can be expected to intensify the problem and, consequently, requires its government to likewise intensify efforts to mitigate illicit trade. This report explores the situation of illicit trade in Turkiye, addresses its susceptibility to inflation, outlines the issues that must be addressed, and presents a set of policy recommendations that could help the government and other stakeholders fortify their efforts to control illicit trade.

The Transnational Alliance to Combat Illicit Trade (TRACIT) , 2022. 24p.

By Euromonitor International

Alcoholic beverages are deeply ingrained in most societies worldwide, with global consumption in 2017 generating US$1.6 trillion in legally registered sales of 222.8 million hectolitres of pure alcohol (“hectolitres of alcohol equivalent”, or hl lae). However, despite the efforts of policy-makers, law enforcement officials, and legitimate alcohol manufacturers, illicit alcoholic beverages still account for a significant share of the total volume of alcohol consumed in many countries. This white paper explores critical issues affecting the problem of illicit alcohol in today’s global alcohol industry. To this end, the paper analyses research conducted in 24 countries in Latin America, Africa, and Eastern Europe, and examines the major factors shaping their illicit alcohol markets. Illicit alcohol is prevalent in these countries: Of the 42.3 million hl lae of total alcohol consumed each year, approximately 25.8% is illicit. In other words, nearly 10.9 million hl lae of illicit alcohol is consumed annually in these 24 countries alone. This suggests they represent an effective sample for exploring this important topic. Illicit alcoholic beverages are defined as those not complying with the regulations and taxes in the countries where they are consumed, resulting in serious health risks to consumers, revenue loss, and brand degradation for legitimate manufacturers, as well as reduced tax revenue for governments. These products are responsible for hundreds of cases of death and illness due to accidental methanol intoxication, millions of dollars used to fund other criminal activities, and the fiscal loss of billions of dollars in unpaid taxes. Health risks affect the poorest and most vulnerable consumers by contributing to widening health inequalities. The most significant risks and costs for each country depend on the characteristics of the local market for illicit alcohol. The landscape of illicit alcohol is varied and complex, ranging from homemade artisanal beverages sold without the proper sanitary permits to legitimately branded bottles of alcohol smuggled illegally into a country. However, although market characteristics differ across countries, the problem of illicit alcohol exists in every region, in developed and developing countries, urban and rural areas, and higher-income and lower-income neighbourhoods alike.

New York: Transnational Alliance to Combat Illicit Trade (Tracit),     42p.

By Tracit

In pursuit of various social, religious, health, or economic objectives governments have imposed a long history of regulatory controls on the producers and consumers of alcoholic beverages. Minimum age purchase restrictions are probably the most renowned and common. Dry laws and other forms of supply restrictions are probably the most notorious. For the most part, the failure of America’s experiment with Prohibition has discouraged governments from imposing them. That is until the onset of the global COVID19 pandemic, when several countries opted for some form of dry law on alcoholic beverages as a tool to mitigate the impact of the virus. Whether or not dry laws were effective in addressing the pandemic itself is not the purpose of this report. The ambition here is to analyze the economic and social impacts of dry laws beyond public health objectives, specifically those consequences associated with illicit trade. The findings are intended to yield valuable lessons from the experience with COVID19 prohibitions, which can be applied to shaping future policymaking at the intersection of alcohol regulation, illicit trade and public welfare.   

New York: Transnational Alliance to Combat Illicit Trade (Tracit), 2021. 34p.

By The International Alliance for Responsible Drinking (IARD)  

Alcohol production and trade exist both within and outside of government regulation; the relative size of each depends on the region of the world and social, cultural, and economic factors. Both segments are well established and people often – knowingly and unknowingly – interact fluidly with both of them. The regulated alcohol market is recorded in government statistics; unregulated alcohol, which is largely illegal, is more difficult to assess and falls into the “unrecorded” sphere (see Taxonomy of Unregulated and Unrecorded Alcohol). This segment is complex and diverse and includes everything from high-quality artisanal homebrew to illicit drinks that may contain methanol or other toxic ingredients. In 2014, the World Health Organization (WHO) issued its Global Status Report on Alcohol and Health and estimated, based on 2010 figures, that unrecorded alcohol made up an average 25% of all alcohol consumed worldwide [2]. Alcohol produced and sold illegally outside of government regulation is the most problematic part of unrecorded alcohol; it is untaxed, circumvents restrictions around availability, is of inconsistent quality, and, depending on the ingredients used to make it, is even potentially toxic. This report considers these wide-reaching implications and brings together recent data on the illicit market, compiled by the global market research firm Euromonitor International. While illicit alcohol is also widespread across Asia and parts of Europe, this report focuses on data from Africa and Latin America. Unregulated alcohol is more widespread in lower-income countries than in more affluent ones. Yet, whether in mature or emerging economies, it is largely consumed in some of the world’s poorest communities and, because it lacks quality and production standards, may contribute to an already significant problem of ill health. While home-produced artisanal alcohol may be part of cultural heritage and largely unproblematic, the illicit sector is not only large but also comes at a significant cost. HUMAN COST: The deaths in early 2018 of almost 150 people in Indonesia from poisoning by adulterated alcohol serve as a reminder that unregulated alcohol can cost lives   

Washington, DC: The International Alliance for Responsible Drinking (IARD),  2018. 16p.  

By Euromonitor International

Alcoholic beverages are deeply ingrained in most societies worldwide, with global consumption in 2017 generating US$1.6 trillion in legally registered sales of 222.8 million hectolitres of pure alcohol (“hectolitres of alcohol equivalent”, or hl lae). However, despite the efforts of policy-makers, law enforcement officials, and legitimate alcohol manufacturers, illicit alcoholic beverages still account for a significant share of the total volume of alcohol consumed in many countries. This white paper explores critical issues affecting the problem of illicit alcohol in today’s global alcohol industry. To this end, the paper analyses research conducted in 24 countries in Latin America, Africa, and Eastern Europe, and examines the major factors shaping their illicit alcohol markets. Illicit alcohol is prevalent in these countries: Of the 42.3 million hl lae of total alcohol consumed each year, approximately 25.8% is illicit. In other words, nearly 10.9 million hl lae of illicit alcohol is consumed annually in these 24 countries alone. This suggests they represent an effective sample for exploring this important topic. Illicit alcoholic beverages are defined as those not complying with the regulations and taxes in the countries where they are consumed, resulting in serious health risks to consumers, revenue loss, and brand degradation for legitimate manufacturers, as well as reduced tax revenue for governments. These products are responsible for hundreds of cases of death and illness due to accidental methanol intoxication, millions of dollars used to fund other criminal activities, and the fiscal loss of billions of dollars in unpaid taxes. Health risks affect the poorest and most vulnerable consumers by contributing to widening health inequalities. The most significant risks and costs for each country depend on the characteristics of the local market for illicit alcohol. The landscape of illicit alcohol is varied and complex, ranging from homemade artisanal beverages sold without the proper sanitary permits to legitimately branded bottles of alcohol smuggled illegally into a country. However, although market characteristics differ across countries, the problem of illicit alcohol exists in every region, in developed and developing countries, urban and rural areas, and higher-income and lower-income neighbourhoods alike.

New York: Transnational Alliance to Combat Illicit Trade (Tracit),     42p.

Edited by Daniel Brombacher, Günther Maihold, Melanie Müller and Judith Vorrath

This anthology examines different dimensions of illicit commodity flows and asks how they can be understood through a geographical lens that looks from the Global South to Europe. By applying a supply chain perspective, it generates insights into how illegal, grey and legal markets merge at certain points in the production chain. This volume seeks to promote a holistic view through a ‘thick description’ of the specific flows and develops practical policy recommendations. It brings together contributions from authors from a wide range of backgrounds, including international scholars, journalists and specialists in both law enforcement and development cooperation 

Baden-Baden, Nomos Verlagsgesellschaft mbH & Co. KG,  2022.  412p.