Battling bootleggers

Who has not noticed the headlines and wondered what can be done? The news tells us that "Counterfeit alcohol production is on the rise in the Czech Republic" and "One in four bottles of alcohol is counterfeit" (Business, April 28-May 4).   

Such recurring stories are troubling for several pressing reasons: public health, the Czech economy and public safety. In a country where, according to the World Health Organization, recorded alcohol consumption for adults is more than 13 liters per capita per year, counterfeiters are profiting while leaving losses of many kinds in their wake.

Concern about harmful drinking is something the Czech Republic shares with nations around the globe. On May 19 in Geneva, the 193 member states of the World Health Assembly were poised to adopt a global strategy to reduce harmful drinking that highlights various policy options, from higher taxes to tighter marketing regulations, and much more.  

When it comes to illegal alcohol, a balance of policy options is certainly required.

First, there are public health concerns. Because illicit alcohol is not regulated by health codes, it can be contaminated, leading to injuries, hospitalizations and even deaths. As The Prague Post reported recently, counterfeiters often use denatured alcohol - a cheap and tax-exempt, but poisonous product - and add potentially dangerous chemicals such as commercial disinfectants in an attempt to make their products drinkable.

Second, there are economic implications. Because illegal alcohol evades taxation, the Czech government loses revenue it would otherwise collect for alcohol produced and sold legitimately. The alcoholic beverage industry estimates that millions of Czech crowns are lost in taxes each year for this reason. Experts say most of the counterfeit alcohol is ultimately served in bars and clubs that fill legally labeled and previously taxed bottles with illegally produced drinks.

Third, there are significant social consequences. Unregulated, untaxed, and unrecorded alcohol flouts the rule of law and invites an array of public safety and other issues. For instance, illicit alcohol production and trade can be associated with organized crime and thus represent a significant challenge to public order.

But how well do governments and health experts understand the range of issues related to illicit, "noncommercial" alcohol?  

Because of its very nature, it is difficult to fully grasp and regulate the informal alcohol market. However, commercial alcohol producers are well-positioned to help take on the challenge of better understanding and targeting the production and consumption of noncommercial products.

For instance, members of the industry have partnered with government agencies in other countries to establish local codes for serving practices and supported anti-counterfeiting efforts through partnerships with local authorities and technological innovations in packaging. Major alcohol producers have also helped successfully develop and implement voluntary self-regulatory and co-regulatory systems that, rather than place the entire burden on the government, call upon alcohol producers to be accountable for upholding certain standards of marketing and other business practices.

In addition, noncommercial alcohol is one of three main areas of focus for Global Actions on Harmful Drinking (Global-actions.org), a consortium of initiatives dedicated to helping reduce the harmful use of alcohol. This effort, which also targets drunken driving and marketing self-regulation, is being implemented by the International Center for Alcohol Policies (ICAP) as the result of a collective commitment made by the chief executives of major international alcohol producers to address harmful drinking through a combination of global and local actions, with an emphasis on low- and middle-income countries.

Alcohol issues can be difficult to address and are often the focus of much debate. At times, problems associated with alcohol consumption, including drunken driving and public disorder, have been cited as a rationale for measures such as raising taxes, setting minimum pricing levels or tightening marketing controls. For instance, Czech Parliament's 2010 budget included excise tax hikes on all distilled spirits sold nationwide.

Unfortunately, such policies can have unintended negative consequences. For example, policies aimed at curtailing the availability of commercially produced drinks, whether through physical availability controls or tax and price increases, can boost production of noncommercial beverages and may even shift demand toward the gray and black markets.  

Rather than potentially compound the issue of counterfeit alcohol, it is my hope policymakers will consider a balanced, informed approach to this complex issue.

As countries such as the Czech Republic reconsider their alcohol policies, it will be important to factor in the challenges presented by informal markets and note the potential of positive contribution from the alcoholic beverage industry in reducing the potential of harm.

More specifically, the alcoholic beverage producers can:

- help improve understanding of this sector so that the interaction between policies and drinking can be better observed and evaluated, and cross-country comparisons can be made;

- provide consumer education and information about illicit alcohol, raising awareness about potential risks and drinking patterns;

- undertake broad public campaigns to raise awareness about existing laws, enforcement and possible punitive measures; and

- collaborate with the government and other relevant authorities to provide training to customs and enforcement officers and continue investing in and deploying relevant technologies.

In short, there are no easy answers to this serious problem, but there are potential solutions and avenues for progress. Working in partnership with communities, law enforcement and government, major alcohol producers operating legally can be part of a collaborative effort to address problems associated with illegal alcohol in this country and beyond.

- The author is president of the International Center for Alcohol Policies (www.icap.org). He has worked in the alcohol field for more than 30 years, including with the World Health Organization (WHO), where he was responsible for global activities on the prevention of alcohol and drug abuse.

Marcus Grant can be reached at
features@praguepost.com