BY DAWSON HOBBS
Jet fuel, embalming fluid, methanol, battery acid and antifreeze. This isn’t a roster of drop offs at the neighborhood hazardous materials recycling center, it’s a list of products added to counterfeit and black market alcohol sold in foreign countries around the world, according to a recent report by a European research firm.
The U.S. has the most diverse, thriving and successful beverage alcohol market in the world. It is also the safest. When an American consumer buys a drink they don’t worry about it being counterfeit or adulterated. Sadly, the same is not true in many other countries, as recent reports show as much as half of all beverage alcohol sold in countries across Africa and Latin America is illicit and reports of spirits made with raw ethanol and flavoring showing up in major cities across Australia.
In the United States, we take for granted that the bottle of beer, wine or spirits we enjoy is pure unadulterated product from a guaranteed manufacturer and that its label has been approved, contents verified, and taxes paid as required by federal and state law.
While American consumers take for granted that the alcohol beverages they enjoy are authentic and free from dangerous ingredients, American tourists in Mexico have unfortunately had a very different experience. Those tragedies, along with other examples around the globe, have finally shined a bright light on an important public safety issue.
You may recall that the Milwaukee Journal-Sentinel did impressive reporting on the more than 150 reports of American tourists who were poisoned, blacked out, and/or subjected to foul play or sexual assault because adulterated alcohol was sold to them.
Authorities in Mexico have since raided dozens of bars, resorts and clubs, seizing more than 10,000 gallons of tainted and counterfeit alcohol. Tequila producers claim that lax regulation and corruption are creating unfair competition-while tequila is a thriving and successful product in the U.S. (and its product integrity is unquestioned here), legitimate distillers face stiff competition from crooks in their home market. USA Today reported that 36 percent of all alcohol served in Mexico is essentially backyard hooch-produced outside a licensed, regulated and inspected system.
More than 85 people were recently killed in Indonesia by fake alcohol, with at least 140 hospitalized for symptoms of consuming toxic liquor. In the U.K., regulators have warned shoppers to be wary of certain brands of alcohol already on the shelves and pushed by pop up vendors and shady retailers. Brewers in Kenya say the marketplace is flooded with counterfeit bottles and cans with no means of identifying legal from illegal. Thousands are killed each year by adulterated alcohol in Russia, China, India, Turkey, Ireland and throughout Asia and Latin America.
In the U.S., our market is different. Producers, distributors and retailers are held accountable by a strict and robust regulatory structure. Every entity in this three-tier system is licensed by the state in which it does business and wineries, brewers and distillers-along with wholesalers-are also licensed and regulated by the federal government.
An entity in any tier that does business with any unlicensed or unscrupulous entity places its license, and thus its entire business at risk. Distributors, retailers and suppliers all act as eyes and ears on the market-a further check and balance within the system.
Central to this system is a unique partnership: state regulators are the primary authority over their licensees, supported by a strong federal regulatory agency within the Department of the Treasury that ensures tax collection as well as legal compliance and approval of product formulas and labels.
Enforcement in this country is ongoing and aggressive. Last year, the Texas Alcohol Beverage Commission intercepted 1,000 containers of counterfeit alcohol destined for the U.S. market. Illinois regulators recently ran a sting operation on licensees dodging taxes and the law by driving to nearby Indiana and purchasing product from Hoosier State retailers only to resell it at Chicagoland retail outlets. Regulators in Mississippi recently busted illegal out of state retailers selling online who didn’t bother to check that the address they were shipping to was the state regulator’s office!
Industry and regulators agree that beverage alcohol is a socially sensitive product that should be enjoyed in moderation and that should be made, distributed and sold with greater scrutiny than other consumer goods. Courts and legislatures have consistently confirmed this important distinction by upholding public safety regulatory benefits.
The alcohol industry, like the rest of the economy, is doing business in the era of disruption-but one thing that shouldn’t be disrupted is our commitment to product safety.
Maintaining that focus will continue to ensure that tragedies so common overseas never happen here at home, and emulating our industry and regulatory structure will help countries abroad deal with a black market trafficking in deadly consequences.
Dawson Hobbs is Senior Vice President of Government Affairs of the Wine & Spirits Wholesalers of America (WSWA), the national trade association representing the wholesale tier of the wine and spirits industry. Founded in 1943, WSWA has more than 380 member companies in 50 states and the District of Columbia, and its members distribute more than 80 percent of all wine and spirits sold at wholesale in the U.S.