The National Treasury is considering substantial increases in alcohol excise taxes, especially on beer and wine. Annually, about 37,000 deaths in South Africa are attributable to alcohol, or more than 7% of all deaths. The Treasury is considering tax tiers that would impose higher excise taxes on higher-alcohol beer and wine. That is good policy: it creates a clear incentive for producers to lower the alcohol content of their products.In early June, the Treasury held its second public consultation on the proposals. Predictably, the alcohol industry strenuously opposed the tax increases. Its headline argument is that the illicit alcohol market is exploding, and higher taxes will only make things worse. (Karen Moolman) The industry’s favourite piece of evidence is a much-cited Euromonitor International report, commissioned by the Drinks Federation of South Africa, which claims the volume of illicit alcohol has increased by 55% from 2017 to 2024. While the full 110-page report is not available online, an infographic summarising its key findings is publicly available. If true, a 55% increase in illicit trade over seven years would be deeply concerning.Before considering whether the estimate is plausible, it is worth asking a more fundamental question: can the report’s methods support such a precise claim?Despite the detail of the analysis in the Euromonitor report, the main conclusion that the illicit alcohol trade has increased sharply cannot be independently verified. The estimate relies on research methods that are poorly suited to measure a phenomenon that is inherently difficult to quantify. Desk research, store visits, stakeholder interviews and consumer surveys may provide useful contextual information, but they are insufficient to generate precise estimates of illicit market size or growth.Despite the detail of the analysis in the Euromonitor report, the main conclusion that the illicit alcohol trade has increased sharply cannot be independently verified.Euromonitor International presents its estimates with astonishing precision and confidence. We are told the volume of illicit alcohol has increased “from 498,290 HL LAE (hectolitres of absolute alcohol) in 2017 to 773,424 HL LAE in 2024″. There is no “approximately”, “about” or “estimated”, or any indication that these numbers are, at best, rough estimates.The report provides insufficient methodological detail for independent replication or critical appraisal. Readers are simply asked to accept the estimates on trust.There is an independent way to assess whether Euromonitor’s claims are plausible. Legal consumption of alcohol — the volume on which excise tax has been paid — can be calculated directly from the Treasury’s Budget Reviews. According to Euromonitor International, legal alcohol consumption increased by 24% from 2017 to 2024, a figure with which we largely concur. Taking population growth into account, this implies that per capita consumption of legal alcohol has increased by nearly 10% over that period.Within the context of very poor economic performance (average per capita GDP was lower in 2024 than in 2017), roughly constant real (inflation-adjusted) alcohol prices, and a worldwide declining trend in alcohol consumption, this is a remarkable outcome. The South African alcohol industry has done extremely well.Yet, Euromonitor International also claims the illicit market has grown by 55% from 2017 to 2024. That is an extraordinary finding, but the report does not explain how it is derived. The Treasury’s excise revenue data do not support the claim that illicit alcohol has substantially displaced the legal market. Unlike cigarettes, where the rapid growth in illicit trade was accompanied by a marked decline in legal sales and excise revenue, real alcohol excise revenue has increased steadily over time, aside from the temporary disruption caused by the Covid-19 sales bans. Legal alcohol sales have since recovered strongly. The cigarette market exhibits the expected pattern of illicit products replacing legal sales, reflected in falling legal consumption and tax revenue. In 2017 illicit cigarettes comprised about 36% of the total market; in 2024 that percentage had increased to about 60%. Over the same period the volume of tax-paid legal cigarettes had decreased by 47%. No comparable pattern is evident for alcohol. The available revenue data is therefore inconsistent with claims of a dramatic expansion in the illicit alcohol market.The industry’s strategy is clear. First, it constructs a narrative that the illicit alcohol market is spiralling out of control. Second, it draws parallels with the cigarette debacle. Finally, it uses this manufactured “crisis” to undermine the Treasury’s efforts to increase alcohol excise taxes, despite the lack of credible evidence that illicit trade has increased.None of this implies the authorities should ignore illicit trade. On the contrary, the state should remain vigilant and proactive in combating it. In this regard, the recent announcement that the government intends to implement a track-and-trace system, not only on cigarettes but also on alcohol, is a positive policy development.Even if Euromonitor International’s estimate that illicit trade accounts for 18% of the total alcohol market is correct, the remaining 82% of alcohol consumed is sold through the legal market. Most of the alcohol-related harm is attributable to the legal alcohol industry. By focusing attention on the harms of illicit alcohol, the alcohol industry aims to divert attention away from itself. Until Euromonitor provides sufficient methodological detail to allow independent scrutiny, its report should not be used to inform public policy. In our view, the Euromonitor report is not an objective assessment aimed primarily at understanding the scale of the illicit alcohol trade but rather an industry-commissioned contribution to a policy debate in which stakeholders have a clear interest in opposing further excise tax increases. Van Walbeek is a professor in the school of economics at the University of Cape Town and the director of the Research Unit on the Economics of Excisable Products (REEP). Vellios is a chief research officer in REEP. PLEASE TAKE OUT FROM HERE FOR PRINT This article draws on two documents we have written: “Illicit alcohol trade: A growing problem or an industry narrative?” in Econ3x3, available here, and a more comprehensive critique of Euromonitor International’s report, entitled “Industry-commissioned and compromised: A critique of Euromonitor International’s report on illicit alcohol trade in South Africa”, available here.