Alcohol Smuggling: A Hangover for Latin America?

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A new report shows how sales of illegal alcohol in Latin America make for a booming contraband industry that is hardly ever held accountable.

The report by Euromonitor International says 15 percent of alcohol is sold illicitly in Latin America. With total annual sales regionally of $4.8 billion, potential annual revenue reaches $720 million.

Mexico tops the list with 42.5 percent of its alcohol sales coming from illegal sources.

     SEE ALSO: Coverage of Contraband

Chile sits proudly at the bottom of the regional table with a level of consumption of only 1.2 percent. The difference is likely due to Chile’s higher gross domestic product (GDP) per capita of about $15,000. By comparison, Mexico’s GDP per capita is just under $10,000.

The main effect of this illegal trade is the loss of around $1.7 billion in tax revenue. The large profits available from these illegal alcohol sales only further embed the trade and increase the value of undeclared incomes within illicit economies.

InSight Crime Analysis

Bootlegging is often seen as a cheeky, victimless crime. But the lack of controls when it comes to production and transport, coupled with high profits and a growing market, makes it an extremely attractive business for expanding criminal organizations.

It is also a crime that is rarely prosecuted. A previous Euromonitor study, for example, placed Peru at the top of the regional sales league with more than 50 percent of its alcohol coming from illegal sources. In 2013 this prompted new legislation and sentencing to counter the various trades in alcohol. By 2016, no-one had been prosecuted under this legislation.

 SEE ALSO: Peru News and Profile

Illegal brewing also has a low threshold of entry. It is low-tech, cheap to start up, and comes with a ready market for the end product. The same applies to drink tampering, where genuine product is diluted and repackaged into used bottles. Where, according to Euromonitor’s Lourdes Chavarria, ethanol is a cheap and common additive. The consumption of which can lead to blindness and death. So, as is often the case, it is the poorer consumer who falls victim more often.

With regional sales in alcohol set to increase by over five percent, and with Latin American countries seen as a marketplace with plenty of room for expansion, it is not difficult to see how small and large criminal actors could uncork large profits with low risk in the times ahead.

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