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Latin American Illegal Alcohol Market Valued at $2.4Billion

on 22/05/14 at 10:37 am


According to the research, the illegal market accounted for 25.5% of the total market in terms of volume by litres of alcohol equivalent (LAE) and 14.1% in terms of value (illegal retail sales price or RSP).  On average, the retail prices of illegal products were 30.3% lower than their legal counterparts in 2012.

indexIn 2012, the market represented a total fiscal loss of US $736 million dollars, with counterfeit and contraband the main categories responsible for the loss. As counterfeit refills have very similar pricing to legal brands, many consumers do not realize that the product they are purchasing is not original.  Some formal channels such as wholesalers, retailers and on premise outlets sell illegal alcoholic beverages alongside legal products, further misleading consumers.  However, there has been increased consumer awareness thanks to campaign efforts and local news about illegal alcohol.

The key drivers of the illegal market include uncontrolled residual ethanol volumes, price gaps and weak law enforcement. The government regulations concerning legal alcohol sales and consumption also indirectly created more opportunities for the market.

Key Takeaways by Country:

Colombia: Illegal alcoholic beverages account for 23.6% of the total market in volume LAE terms and 12.1% in value terms; the legal market represents the other 76.4% and 87.9%. It is noted that the majority of consumers in the middle-/low-income segments make purchasing decisions based solely on price, driving the sales of some counterfeit and smuggled spirits.