The recently launched Report on trade and consumption of illicit alcohol in the country by the Uganda Alcohol Industry Association has revealed that the average illicit market size of alcohol drinks increased to 956.8 million dollars in 2020.
The report, titled, “Understanding and Sizing Illicit Alcohol Market in Uganda” was released from research done in 2021 by Euromonitor International.
The Report revealed that between 2017-2021, the value market size of illicit alcoholic drinks increased at a 18.3% Compound Annual Growth Rate (CAGR) from USD577.8 million in 2017 to USD956.8 million in 2020.
“The highest value growth was observed in smuggling due to the increasing average unit prices for premium spirits which are imported to the country illegally,” it added.
The report noted that smuggling of premium spirits, mainly; whiskey, Gin, cognac and other branded beverages usually occurs through false declaration by importers reported by industry sources as collusion with customs officials.
“Tax leakage is driven by wide scale under declaration of production of spirits, mainly; illegal waragi by small scale registered entities located in hidden clandestine areas outside the main centres as illegal operators make use of multiple distribution networks and falsify information to remain under the radar,” it added.
Illicit homebrew was another large category in terms of value growth over 2017 – 2020.
The Report also revealed that spirits is another popular counterfeit and smuggled alcoholic drink, with an illicit volume share of more than 90% in 2020.
Counterfeit and illicit unbranded alcoholic drinks is mainly distilled alcohol (spirits) from illicitly sourced, imported and smuggled portable ethanol from Tanzania and Kenya.
“Smuggling focuses on international and premium brands of whiskey, Gin, vodka, brandy and other spirits by air, land or sea, in varying quantities, but also includes the smuggling of ethanol as an ingredient for the production of illicit spirits. Popular smuggled source countries include; Tanzania and Kenya,” the Report said.
It further revealed that undeclared illicit waragi production by registered and unregistered small scale operators is key source for tax leakage in 2020.
Fermented and distilled homebrew, the Report said, is sold in both urban and rural areas with volumes depending on ready supply of sugarcane, molasses and fruit ingredients.
While Illicit fermented homebrew has a short shelf life, the report said, Illicit distilled homebrew is widely sold, and available across formal and informal channels at affordable prices.
Furthermore, the report said that illicit alcohol scales are strongly driven by demand for widespread affordable homebrew.
“Distilled and fermented homebrew are found to be the most prominent illicit drinks followed by illicit spirits. Typically, homebrew is widely available in both urban and rural areas, and comes in many forms, with illicit waragi being the most popular.”