Europe’s accidental promotion of black-market alcohol

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As production and sales move underground, governments lose their ability to regulate, assess and control alcohol distribution. This can result in serious public health risks, especially for the poorest and heaviest drinkers, writes Marjana Martinic.

Dr Marjana Martinic is the deputy president of the International Centre for Alcohol Policies (ICAP) and scientific advisor to the European Commission as part of the Alcohol and Health Forum’s Science Group.

"Traditions of home-produced wine, beer, sprits and cider are deeply steeped in many European countries, and these typically pose few health risks. But as a spate of recent disturbing headlines make clear, from the deaths of 38 Czech citizens from alcohol poisoning in September to a major raid and seizure of 50,000 counterfeit bottles in Russia in April, there is a dark side to non-commercial alcohol – the black market.

Illegally distilled, counterfeit and surrogate alcohol poses a risk to human health, accentuates social problems, and is associated with criminal activity as well as sizeable losses in government revenues.

About one-quarter of all alcoholic beverages consumed in Europe is in the informal sector, also referred to as noncommercial alcohol. Beyond home-produced beverages, this category includes alcohol which is illegally produced and sold, including on a mass scale.

It also includes counterfeit beverages that are passed off as commercial brands. Since there is no quality control of these beverages, they may contain poisonous contaminants and higher alcohol content than legal drinks. 

They are significantly less expensive than legal products but, as the Czech example shows, may carry significant risks.

Rates of non-commercial consumption vary widely by region and country, but the World Health Organization (WHO) indicates they have been steadily increasing across Europe since the 1970s. Though often associated with emerging markets in Eastern Europe, noncommercial alcohol is also a real issue in more mature Western European economies.

Even in the UK, rates of noncommercial alcohol consumption are rising and illicit alcohol is estimated to represent around 7% of the market. Illicit alcohol production and trade often involve criminal activity across national borders.

New research on black market alcohol in Estonia, Latvia and Poland reveals two consistent findings. First, illicit alcohol’s lower price and easy availability are major reasons why consumers purchase noncommercial alcohol, and this effect is intensified during periods of slow economic growth.

Second, the studies confirm that the factors driving home-production and alcohol’s black market become more pronounced when governments raise prices through increased taxes or restrict the availability of legal beverage alcohol.

As production and sales move underground, governments lose their ability to regulate, assess and control alcohol distribution. This can result in serious public health risks, especially for the poorest and heaviest drinkers. Ironically, governments also forfeit tax revenues with policies which inadvertently drive consumption underground.

The impact of government policies on the production of noncommercial alcohol highlights the limitations of population-level measures for reducing harmful drinking.

This approach, which has dominated public health thinking and public policy for the past several decades, focuses on reducing a country’s overall consumption of alcohol through supply-side interventions as a measure to reduce harm.

The population-level approach suffers from two major flaws. First, it is largely indiscriminate and insensitive, targeting all alcohol consumption and seeking to reduce overall levels of drinking without recognising the distinct characterizations of harmful use.

Second, it may generate unintended consequences. Government policies designed to raise prices and restrict availability historically have driven black market growth. The black market is largely immune to regulation and effective policymaking is blunted by its lack of transparency. Where restrictions are most severe, we see the black market flourish.

Drinking is and always will be a significant aspect of most European cultures, making prohibitory policies an inadequate solution. We need a more balanced, multifaceted approach to go beyond blunt government regulatory instruments and focus on prevention.

In the increasingly dangerous area of black market alcohol, the interests of government, law enforcement, public health and industry converge. We need more in-depth research and understanding of this market and policy options to allow governments and a broad spectrum of other stakeholders to work together to reduce harmful drinking and combat the black market."

Further Reading

  • International Centre for Alcohol Policy: Homepage

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