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Artisanal Illicit Alcohol Consumption grew to 71% in 2024

Artisanal alcohol holds strong cultural significance and is an integral part of traditional celebrations and gatherings.

by Wasswa Deo
May 22, 2025
in News
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KAMPALA– The sale of traditional alcoholic fermented beverages (artisanal) commonly known as Malwa, Kwen, Kasese, Arege grew by 2% from 69% in 2020 to 71% in 2024, according to a custom research report released today by the Alcohol Industry Association of Uganda. The Report, “Understanding illicit alcohol market in Uganda,” researched and compiled by renowned international researcher Euromonitor International, was launched at Kampala Serena with various stakeholders from the industry in attendance.

According to the research conducted in the first quarter of this year, on average, Ugandans consume 4.6 litres of pure illicit alcohol per year, compared to 2.3 litres of pure legal alcohol. In simple terms, 4.6 Litres is equivalent to: four 500ml cans of beer per week, OR four Glasses of wine per week OR seven 30ml shots of vodka per week.

The Uganda Alcohol Industry Association (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 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 the issue.

“For about 10 years up to date, illicit alcohol has been accounting for 65% of the market to date; and the 35% of leagal and regulated alcohol are paying over UGX 1Trillion in taxes. Government should be concerned about the revenue losses,” said UIA Vice Chairperson Emmanuel Njuki while giving introductory remarks at the event.

He added: “If the challenge of illicit alcohol was to be tackled, it would mean a better business opportunity; either you will see a lot of investments from the existing industry players, or you will see more people coming into this market to invest. Through that, we get more taxes, then there’s 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 UGX15 trillion in 2024, with 40% of this accounted for by illicit alcoholic beverages. Illicit sales in this period amounted to UGX6 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% cheaper than the legal alcohol. However, an unforeseen advantage to this was that counterfeiting and smuggling/contraband alcohol shrunk from 27% to 25%, and 4% to 3%, respectively, from 2020-2024. Other findings in the report indicate that in 2024, the total Ugandan alcohol market reached 1.7 million hectolitres, with 67.3% being illicit products compared to 64.5% in 2020.

While presenting the report, Benjamin Rideout, Consultant, explained that between 2020 and 2024, the illicit alcohol market has expanded by 157,453 in Hectolitres. The volume share of illicit alcohol increased to 67.3% in 2024, from 64.5% in 2020. The fiscal loss relating to illicit alcohol sales grew at a Compound Annual Growth rate of 16.2%, due to increasing volumes and higher excise duties on various alcohol categories such as wine and spirits.

“Illicit alcohol is driven by affordability, accessibility, and low levels of enforcement. With over 20% 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 counterfeit,” he said.

Benjamin Rideout added that consumers believed illicit alcohol is most widely available in Buganda at 26%, West Nile (19%), Lango (19%), and Teso at 13%, while along the Eastern Border in Busoga, illicit alcohol is available at 15%.

There is tax leakage from the thriving illicit alcohol trade stemming from scale, 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 UGX3 trillion in 2024. However, only 10% 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% lower than the equivalent legal beverages. While spirits, such as vodka and gin, are cheaper by around 29%, whereas brown spirits, such as rum and whisky, deliver discounts of 15% 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. If consumers are made aware on how this inadvertently impacts their access to social amenities, perhaps we could see a behavioral shift in its consumption.”

Isaac Arinaitwe, the Principal Economist at the Finance Ministry, applauded UAIA for instituting the study. He said that the findings, particularly on the fiscal loss as a result of illicit are alarming and pledged to work with the Euromonitor team to understand the numbers in the report.

“Illicit alcohol even has a public health challenge to the consumers; it undermines fair competition to legitimate players. In terms of how to address the challenge of artisanal alcohol, it may be difficult to tackle, but we can address the issue of counterfeits; I know this would require a holistic approach using the Ministry of Local Government because they have a presence all over the country,” he said.

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

Hon. Amos Kankunda, chairperson parliament finance committee confirmed that with the increased budget allocation to URA and the relevant government agencies, enforcement should be intensified.

In addition to fiscal loss, government is losing people due to consumption of illicit alcohol- he said.

“In West Nile, we still have the challenge of illicit, Eastern Uganda has largely been handled apart from the issue of ethanol, which traders claim is from Kenya, yet it is from Swaziland. Identification of illicit products is still a challenge, unless the officers are trained in the field on how to identify them,” he stated.

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

The respective shares of counterfeiting and smuggling/contraband alcohol shrank somewhat over 2020-2024, from 27% to 25%, and 4% to 3%, respectively. 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 Mombasa.

Other Key Highlights

• The illicit market continues to grow, both in volume and value. In 2024, illicit alcohol sales represented 67% of the total alcohol market in volume terms and 40% in value terms. Illicit volume sales grew by 16% since 2020 in HL LAE

  •  Illicit volume sales are predominantly generated by illicit artisanal alcohol produced at little cost by rural households and small-scale informal distilleries, whereas value sales mainly derive from counterfeit alcohol – largely copycats of popular local and international spirit brands, such as Uganda’s Waragi gin, Johnnie Walkernwhisky and Bond 7 whisky.
  • Fiscal loss of UGX3 trillion is driven mostly by illicit artisanal alcohol, such as Waragi, Tonto, Malwa and Sabula.
  • Fiscal losses have grown by 80% since 2020. Counterfeiting is the second contributor to fiscal loss, due to large domestic ethanol production, often diverted to enable the production of counterfeit spirits.
  • Ugandan consumers are aware of what makes products illegal. However, there is a degree of acceptability despite this, evidenced by high consumption despite the awareness of the health risks. For Ugandans, affordability was cited as the main driver for illicit alcohol consumption.
Wasswa Deo

Wasswa Deo

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