Industry-commissioned and compromised: A critique of the EM report on illicit alcohol trade in SA
In April 2025, Euromonitor International (EM) published a report, commissioned by the Drinks Federation of South Africa (DFSA), titled ‘Understanding the illicit alcohol market: South Africa’. The EM report was released about six months after the National Treasury published a review on alcohol taxation, where they proposed substantial reforms. The industry has a strong incentive to construct a narrative that high taxes drive illicit trade, thereby countering National Treasury’s proposed alcohol tax increases. The EM report has been quoted extensively by the alcohol industry in the media and in stakeholder dialogues with National Treasury.
There are several fundamental flaws in the report's methods and logic. The report is lengthy, detailed, and highly precise in its numerical claims. It claims to support the government in understanding the illicit alcohol market. Yet, one must ask whether it genuinely aims to support government, or whether it is intended to weaken support for stronger alcohol tax policy. Does it provide sufficient methodological information for independent parties to verify or replicate its findings? Are the assumptions underlying their estimates valid? Are the conclusions valid?
REEP researchers Corné van Walbeek and Nicole Vellios, have just published a critique that addresses these questions.
They suggest that the EM report should be read with caution. It lacks the transparency required for independent verification. Rather than serving as an impartial assessment of the illicit alcohol market, it appears to form part of a broader debate about alcohol excise taxation, in which stakeholders have vested interests.
Policymakers should evaluate its methodology, assumptions, and findings carefully. While illicit trade is a serious concern, international literature shows that higher taxes do not necessarily lead to more illicit trade if accompanied by strong enforcement.