Strategies for combating illicit trade in the liquor industry

The nature of the illegal sale of alcohol means it is difficult to quantify the precise scale of illicit trade in the liquor industry. But Tax Justice South Africa, an NGO set up to tackle the large-scale tax evasion that is depriving South Africans of vital services, estimates that 500 million litres of illegal alcohol is consumed in South Africa every year, costing the country R6 billion in taxes. Furthermore, because the manufacture of illegal alcohol is unregulated, it may contain fatal levels of alcohol or other toxic ingredients. What is being done to combat the illicit trade in liquor? 


Illegal sale of alcohol in the Western Cape is currently regulated by SAPS. It is not regulated by the Western Cape Liquor Authority and therefore premises suspected of illegal trading are not inspected by Inspectors from the Western Cape Liquor Authority. This activity falls outside of the scope of the Western Cape Liquor Act 4 of 2008 (as amended).  

White paper

The Western Cape Liquor Authority drafted the Western Cape alcohol-related harm reduction policy which currently is currently available for comment. The White Paper states:  

“Unlicensed liquor outlets and the illicit liquor trade identifies the concern of a lack of regulation leading to increased harm and the loss of tax and licence revenue that can be used to mitigate harms. 

The policy proposes taking steps to bring responsible unlicensed liquor outlets into the regulated space in a sustainable and responsible manner, identifying mechanisms and criteria that will enable the re-zoning of outlets for liquor sales in appropriate residential areas and prioritising upstream interventions targeting suppliers to the unlicensed liquor industry and the illicit liquor trade. 

Awareness of alternative economic opportunities should be provided to currently unlicensed outlet owners. Liquor enforcement units are to be capacitated and strengthened through increased resources and an integrated liquor enforcement approach, among other proposals.”

According to the Western Cape Liquor Authority, the number of licensed liquor outlets in the Western Cape in December 2015 was 9,296, comprising 8,888 liquor licences issued by the Western Cape Liquor Authority and 408 issued by the National Liquor Authority. In a 2015 survey, the number of unlicensed liquor outlets in the Western Cape was estimated at 3,483, equal to 37% of licensed outlets.

The White Paper proposes the following policy interventions:  

  • Take steps to bring some responsible unlicensed liquor outlets into the regulated space in a sustainable and responsible manner to facilitate compliance with minimum requirements.

The regulated space must be attractive for both traders and their customers. Incentives for becoming a licensed outlet should be clearly identified and communicated to current illegal outlets as well as the consequences of not becoming licensed. The application process for liquor licences must be simplified and streamlined.

  • Identify mechanisms and criteria, working with municipalities, that will enable the re-zoning of outlets for liquor sales in appropriate residential areas.

The importance of this is to ensure there is a clear basis for re-zoning. Zoning is a municipal competence. The issuing of liquor licences is a provincial competence and the proposal is to ensure collaboration between the two spheres of government in order to reduce harm, while bringing a predictable and regulated environment, particularly for outlets in residential areas. 

  • Prioritise upstream interventions targeting suppliers to the unlicensed liquor industry and the illicit liquor trade. 

A key strategy to combat the unlicensed liquor industry and the illicit liquor trade is to cut off the supply at the source. Obtaining information from community structures and enforcement officials of the licensed traders supplying the liquor, targeting enforcement operations on these licensed traders and lobbying for the prioritisation of the prosecution of them is recommended as a focus area. 

  • Place evidence before the justice system to argue for the prioritisation of liquor law transgressions and to be considered in the sentencing process for tougher sanctions. 

Unlicensed liquor outlets that cannot be brought into the regulated space and those that do not comply must face the consequences of the justice system, be prosecuted and closed down. Alcohol’s mind-altering effects are drivers of various and extensive harms, including violence (especially gender-based violence) and criminal activities such as robbery, murder and assault. The courts need to be cognisant of this and prosecutors need to be assisted with evidence, such as academic studies and statistics, placed before the courts. Consistent prosecution and heavier sentences will also act as an incentive to become licensed. 

  • Create awareness of alternative economic opportunities to currently unlicensed outlet owners who cannot be accommodated within the applicable zoning scheme.

A clear strategy benefiting and empowering individuals regarding economic alternatives must be developed and shared with the affected parties, including information on relevant business support programmes. 

This White Paper was drafted and has been in circulation since 2015, so whether these amendments and proposals are ever implemented remains to be seen.  

Help with your liquor licence

If your liquor licence application renewal is outstanding we can help you with submission and the correct documentation. We can handle objections and manage any compliance issues. Get legal help with your liquor licence application here.  


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