New report: Ugandans consume more illicit liquor than legal alcohol

The Uganda Alcohol Industry Association (UAIA) reports that Ugandans consume 4.6 litres of pure illicit alcohol per year, which is double the 2.3 litres of pure legal alcohol they consume.

In other words, 4.6 litres is equivalent to four 500ml cans of beer per week, four glasses of wine per week, or seven 30ml shots of vodka per week. According to the report, the sale of traditional alcoholic fermented beverages (artisanal), commonly known as Malwa, Kwen, Kasese, and Arege, grew by two per cent from 69 per cent in 2020 to 71 per cent in 2024.

The report, “Understanding the Illicit Alcohol Market in Uganda”, researched and compiled by international researcher Euromonitor International, was launched at Kampala Serena hotel, with various stakeholders from the industry in attendance.

UAIA commissioned the report in order to build knowledge of and understand the drivers of the illicit alcoholic drinks trade, its shape, its size, and its impact on government revenue in Uganda in comparison to 2020. The overall objective is to work with the government to understand the problem and identify ways to combat it.

“For about 10 years up to date, illicit alcohol has been accounting for 65 per cent of the market to date, and the 35 per cent of legal and regulated alcohol are paying over Shs 1 trillion in taxes. Government should be concerned about the revenue losses,” said Emmanuel Njuki, the UAIA vice chairperson.

He added, “If the challenge of illicit alcohol were to be tackled, it would mean a better business opportunity; either you would see a lot of investments from the existing industry players or you would see more people coming into this market to invest. Through that, we get more taxes. Then there is the good health of our people and a better return on investment for our industry investors.”

The report highlights that the total alcohol market amounted to Shs 15 trillion in 2024, with 40 per cent of this accounted for by illicit alcoholic beverages. Illicit sales in this period amounted to Shs 6 trillion.

Factors such as unemployment and the rising cost of living have driven demand for affordable/cheap home-made artisanal alcohol like wines and spirits, which are up to 81 per cent cheaper than the legal alcohol.

However, counterfeiting and smuggling/contraband alcohol shrank from 27 per cent to 25 per cent and 4 per cent to 3 per cent, respectively, from 2020 to 2024. Other findings in the report indicate that in 2024, the total Ugandan alcohol market reached 1.7 million hectolitres, with 67.3 per cent being illicit products compared to 64.5 per cent in 2020.

While presenting the report, Benjamin Rideout, a consultant with Euromonitor, noted that illicit alcohol is driven by affordability, accessibility and low levels of enforcement. With over 20 per cent of Uganda’s population living below the national poverty line, the affordability of alcoholic beverages is paramount to influencing consumer choices.

Illicit alcoholic beverages are characteristically cheaper than legal brands even though illicit producers and distributors closely monitor legal market prices to maximise profits, especially with counterfeits.

Rideout added that there is tax leakage from the thriving illicit alcohol trade stemming from scale, with unregulated distilleries not declaring, under-declaring or misclassifying their production, followed by counterfeit fabrication. The contribution of counterfeit and illicit brands to fiscal loss was valued at Shs 3 trillion in 2024.

However, only 10 per cent of consumers associate illicit beverages with tax evasion or the loss of revenue to the government.

“Illicit alcoholic drinks are priced more affordably, with price points up to 81 per cent lower than the equivalent legal beverages. While spirits, such as vodka and gin, are cheaper by around 29 per cent, whereas brown spirits, such as rum and whisky, deliver discounts of 15 per cent on average,” reads part of the report.

The association therefore recommends a need for widespread sensitisation of consumers on the impact of illicit substances not only on their health but on the bigger picture because if consumers are made aware of how this inadvertently impacts their access to social amenities, perhaps we could see a behavioural shift in its consumption.

Abel Kagumire, the commissioner of Executive Operations at Uganda Revenue Authority (URA), explained that the tax body has set up a working group to pick up field intelligence to address challenges of illicit trade, especially in alcohol and tobacco.

“This report has unearthed areas where leakages have been. We have been collecting Shs 1 trillion from the industry, and we clap hands, but using this, we can even collect Shs 4 trillion. As URA, we are surprised by the findings, and we have taken them in good faith,” said Kagumire.

Consumers believed illicit alcohol is most widely available in Buganda at 26 per cent, West Nile at 19 per cent, Lango at 19 per cent and Teso at 13 per cent, while in Border in Busoga, illicit alcohol is available at 15 per cent.

Counterfeit alcohol thrives across both formal and informal on-trade outlets with smuggled/contraband alcohol originating mainly from Kenya and the DRC through porous, poorly controlled land borders as well as through Lake Victoria via Kenya’s port of Kisumu.

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