understanding the extent and nature of the illegal alcohol trade in Tanzania - PowerPoint Presentation

understanding the extent and nature of the illegal alcohol trade in Tanzania A report compiled by Euromonitor International Consultingfor Combatting the Illicit Trade of Excisable Products Workshop (ITIC) 1 December 2017

ABOUT EUROMONITOR INTERNATIONAL EUROMONITOR INTERNATIONAL METHODOLOGY FOR ILLICIT ALCOHOLILLICIT ALCOHOL DEFINITIONS CROSS COUNTRY COMPARISON OF ILLICIT ALCOHOL ILLICIT ALCOHOL IN TANZANIA: KEY FINDINGS ILLICIT ALCOHOL IN TANZANIA: MARKET OVERVIEW CONTACT DETAILS

Euromonitor International network and coverage ABOUT EUROMONITOR INTERNATIONAL ILLICIT ALCOHOL IN TANZANIA OVERVIEW

Custom solutions and capabilities ABOUT EUROMONITOR INTERNATIONAL Category evaluation Sizes, shares, growth Segmentation Market entry strategy Competitive intelligence Profiling Benchmarking Partner evaluation Innovation NPD business case Consumer insights Product claims Route to market Production, imports, exports Supply and value chainB2B and B2C channelsMacroOpportunity frameworksPESTQuarterly tracking ForecastingLaunch, sales, demand, lifecycleSuccess / failure probabilitiesDetermine risk exposureScenario analysisMarket simulationsPortfolio analysisTest business casesConsumer analyticsCustomer profilingIncome distribution models Purchasing behaviourMarketing analyticsMarketing effectivenessSubstitutes and complementsPrice and channel strategyVisualisationDiscovery, sharing, communicationMarket attractiveness plannersPerformance monitoring understanding the extent and nature of the illegal alcohol trade in Tanzania

Project Background Illicit alcohol trade poses a substantial health threat to consumers, whilst the economic consequences for alcoholic drinks companies and governments are equally considerable. The local alcoholic beverage industry is aware of the damage being done to its business by illegality. To combat this more efficiently our clients want us to gain additional knowledge regarding the details and volumes of illegal trade. Client Objectives The main objective of an illicit alcohol project is to understand the shape of all types of illegal alcohol markets . Key points to be researched during a study include: To examine the current trends of the illicit alcohol landscape.To size the total market for illicit alcohol and illicit alcohol categories .To understand consumer purchase motivation.To uncover and detail current methodologies used by official agencies to quantify the illegal alcohol market/track illegal alcohol consumption. To estimate the role that regulatory measures might play in this.To illustrate the value chain for illicit alcoholic beverages by illicit category.Project scope for sizing illicit alcohol and fiscal lossunderstanding the extent and nature of the illegal alcohol trade in TanzaniaEUROMONITOR INTERNATIONAL METHODOLOGYCategory CoverageCounterfeited and illegal brandsSubstitution/refillIndustrial manufacturing of illicit/unbrandedSmugglingSmuggling of ethanolSmuggling of the finished productHomebrew artisanal alcoholIllicit homebrew Tax leakage SurrogateAlcohol Type CoverageDistilledFermented

Project research methodology understanding the extent and nature of the illegal alcohol trade in Tanzania EUROMONITOR APPROACH Secondary Source Review Extraction and analysis of Euromonitor International’s Passport data and reports focusing on alcoholic drinks industry. Review of secondary sources that may be available in the public domain on the size of the legal market for alcoholic beverages in, the market the scale and main illicit activities in the market and key trends. Industry Specialisation In-depth conversations with Euromonitor industry managers and country analysts.Compilation of industry contacts, and insights on trends and direction for future research.Store/tavern ObservationsStore visits to try to understand what illicit activities are taking place as a result of the commercial (bad) practice by retailers/informal traders and tavern/bar owners. Analysis and ReportingData review, interpretation and assessment to build a composite view of the illicit alcohol market in both volume and value terms.Validation and cross-checking of all project findings and associated data.Preparation of a dynamic PowerPoint delivery report.Results presentation and discussion. Step-by-Step Process In-depth Trade Interviews In-depth, semi-structured interviews with relevant government officials responsible for monitoring the sale and licensing of alcoholic beverages, NGOs, trade associations, importers , breweries/distilleries, distributors, retailers, industry consultants , and other players in the supply chain .

Value chain analysis used to avoid double counting understanding the extent and nature of the illegal alcohol trade in TanzaniaEUROMONITOR APPROACH Beverage classified as smuggling because it became illicit at that specific stage of the value chain = SMUGGLING In many cases illicit alcoholic beverages can fall into more than one category. To avoid double counting and to better understand each of these categories, Euromonitor International designated each product to the category in which it first enters the illicit alcohol market of any given country. For example, if an illicit homebrew beverage is created from smuggling ethanol, then for the purposes of this study it is considered smuggling because the alcohol became illicit the instant it entered the country without paying the due taxes, prior to the homebrew production and distribution process. This example (illustrated below) helps explain the Euromonitor International category classifications for this project :

Category definitions for illicit alcohol understanding the extent and nature of the illegal alcohol trade in TanzaniaDEFINITIONS Category Subcategory Definition Counterfeited and Illegal Brands Substitution/refill Illicit alcohol sold as licit brands or empty bottles of legitimate products refilled with cheaper alcohol Industrial manufacturing of illicit brands or unbranded beverage alcohol Manufacturing of illicit branded or unbranded alcohol Smuggling Smuggling of ethanol Illicit imports of ethanol as a raw material Smuggling of the finished product Illicit imports of packaged alcoholic beverages Homebrew Artisanal AlcoholIllicit homebrew Illicit homebrew alcoholic beverages made for commercial purposesLicit homebrewBeverage alcohol produced as part of long-standing traditional and/or cultural practices. Includes home production for personal use; excludes home production for saleSurrogate- Alcohol not meant for human consumption (e.g. pharmaceutical alcohol) diverted to the alcoholic beverages marketTax Evasion-Licit alcoholic beverages (locally produced) on which inappropriate or no excise production taxes are paid

Alcoholic beverages market size 2015 in MalawiCROSS COUNTRY COMPARISON 160,003 HL, LAE Total Alcohol Market Volume 62,380 HL, LAE Total Licit Alcohol Market Volume 97,623 HL, LAE Total Illicit Alcohol Market Volume US$105 mn Total Licit Alcohol Market Value RSP US$62 mn Total Illicit Alcohol Market Value in Illicit RSP US$80 mn Total Fiscal Loss Source: Euromonitor Consulting Abbreviations: HL - Hectolitre LAE - Litres of alcohol equivalent Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Alcoholic Beverages Market Size 2015 in Uganda CROSS COUNTRY COMPARISON 1, 106 , 479 HL, LAE Total Alcohol Market Volume 430,203 HL, LAE Total Licit Alcohol Market Volume 676,276 HL, LAE Total Illicit Alcohol Market Volume US$2,126 mn Total Licit Alcohol Market Value RSP US$676 mn Total Illicit Alcohol Market Value in Illicit RSP US$172 mn Total Fiscal Loss Source: Euromonitor Consulting Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Alcoholic Beverages Market Size 2015 in TanzaniaCROSS COUNTRY COMPARISON 700,369 HL, LAE Total Alcohol Market Volume 345,318 HL, LAE Total Licit Alcohol Market Volume 355,050 HL, LAE Total Illicit Alcohol Market Volume US$1,239 mn Total Licit Alcohol Market Value RSP US$353 mn Total Illicit Alcohol Market Value in Illicit RSP US$110.1 mn Total Fiscal Loss Source: Euromonitor Consulting Abbreviations: HL - Hectolitre LAE - Litres of alcohol equivalent Understanding the Extent and Nature of Illicit Alcohol in Tanzania

High alcohol consumption and large informal alcohol market TANZANIA KEY FINDINGS Tanzania has a strong alcohol culture amongst the adult population, drinking formal and informal (unrecorded) alcohol. The country has a high poverty rate. Decreasing consumer incomes amongst the low-income segment and an increasing youth unemployment rate have increased the incidence of drinking alcohol. Illicit distilled homebrew accounts for the greatest illicit volume. The homebrew is produced by illegal producers from molasses, sugarcane ethanol and fruit in unsanitary conditions. With a high alcohol content, it is sold across both licenced and unlicensed outlets. Counterfeiting of low-cost spirit alcohol brands accounts for the second-largest volume sold, mainly in plastic sachets. The low-cost spirits sachets are cheap and readily available across all informal and formal outlets, thus increasing alcohol consumption. Smuggling of alcohol is occurring via sophisticated illegal cartels across the country’s many borders. Border controls are weak and control procedures are not enforced or adequate. Bribery and corruption of officials is occurring. Smuggling and counterfeiting of goods continues to increase. The new government implemented new regulations in 2015/16, restricting sales trading of alcoholic beverages during work day hours across on-trade channels. However, this is still not adequate, as enforcement and implementation of the regulation is slow and prosecution of illegal producers of informal alcohol low. Health issues relating to the abuse of alcohol is already a serious health crisis in society, with increasing cases reported at hospitals and clinics, especially amongst the unemployed youth and adult population segments. Key Findings Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Low-cost (branded and unbranded) spirits are both a tax liability and a public health hazardAlthough alcohol abuse is a growing public health concern, the country still lacks an effective strategy to tackle the problem Alcohol abuse , along with d angerous levels of illicit spirits consumption, is now a major health challenge in the country. Over 10% of the county’s population are estimated to drink excessively, according to a survey conducted by the Ministry of Health and Social Welfare in 2013.Even though the government committed to raise taxes on licit alcohol, tighten controls on under-age drinking and regulate the market, measures have yet to materialise.The unregulated spirits market is driving dangerous and uncontrolled expansion of consumption of illicit alcohol Many illegal distillers are visibly distributing nationally through registered and unregistered foodservice establishments and retailers while evading tax.Counterfeit production is high with widespread tax avoidance among both producers and retailers.Production takes place in rural unpopulated areas and transported by sophisticated cartel networks across regions using ambulances, rental cars, trucks and hired drivers to deliver to traders. Understanding the Extent and Nature of Illicit Alcohol in TanzaniaTANZANIA KEY FINDINGS

High poverty amongst informal sector consumers along with high corruption levels fuels illicit alcohol activities TANZANIA KEY FINDINGS Total alcoholic beverages market in 2015 700,369 HL LAE US$1,592 million Illicit Market Licit Market Source: Euromonitor Consulting In 2015 the total alcoholic beverages market in Tanzania stood at 700,369 HL (LAE) in volume terms and US$1,592 million in value terms. Illicit alcoholic beverages accounted for 50.7% of the total market in LAE volume terms in 2015 and 22.2% in value terms, while the licit market represented the remaining 49.3% and 77.8% respectively. Market players state that the illicit alcohol market continues to grow due to higher poverty levels across informal area consumers, high unemployment, a lack of government enforcement or adequate border control procedures. Some factors for illicit growth include high incidences of corruption and bribery, lack of consistent or proper enforcement, for inspecting and clamping down on unregistered illegal spirit producers across the alcoholic beverages supply chain to ensure accountability and responsible trading.This has allowed a steady increase in the level of counterfeiting of low-cost spirits, increased smuggling activities as well as the increased production of illicit distilled homebrew alcohol by illegal producers.Tanzania also has a vast informal sector for distributing alcohol that includes market stalls, street kiosks and unlicensed bars, which increases availability and ease of purchase. The informal sector is completely unregulated and untaxed, allowing illicit trade to expand to all parts of the country.Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Stable economic growth supports alcohol growth as trading down occurs TANZANIA KEY FINDINGS Market outlook in the Tanzanian illicit alcohol industry Tanzania’s economy is expected to continue to experience steady macro-economic growth under a new stable government, tightening fiscal monetary policy and the inflation environment over 2016/20. The volatility of the currency is expected to be more stable to 2020 against foreign currencies due to a more favourable outlook. Illicit production of distilled homebrew i s expected to continue increasing as illegal producers have sophisticated networks of manufacturing and distribution, and bribe officials as prosecution is low; consumer demand will remain high for cheaper local spirits, which are widely available. Illegal manufacturing and tax leakage for high-volume, low-cost spirits in 50/100ml sachets will continue to present a barrier to the legal industry. This format is also identified as being responsible for high levels of alcohol abuse, given its wide availability and the unrestricted sales of cheap spirits to all age groups, including school children. 1 2 3 4 5 Smuggling of premium products is expected to remain a major impediment to the licit market unless the government shows a firm commitment to tightening border controls and enforcement. The government needs to implement stronger coordination among the various government ministries to enforce the regulation of alcohol production and taxation amongst illegal producers and tax evaders. Consumer expenditure on alcohol is expected to grow, however with increasing alcohol prices and greater excise on alcoholic beverages there will be a tendency to trade down to cheaper brands within a specific category, such as opaque beer and economy spirits.6 Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Illicit alcohol activities driven by many illegal operators TANZANIA ILLICIT ALCOHOL OVERVIEW Illicit alcoholic beverages market in 2015 355,050 HL LAE US$352.9 million US$110.1 million Smuggling Illicit Homebrew Counterfeit Tax Leakage Source: Euromonitor Consulting The total size of the illicit alcohol beverages market was 355,050 HL (LAE) by volume and US$352.9 million by value in 2015.Illicit homebrew is the largest illicit activity in Tanzania, accounting for 77.9% by value and 83.3% by volume of total illicit activities in 2015. Counterfeiting of legal/illegal alcoholic brands, the second-largest in volume terms (8.5% of illicit volumes), accounted for 5.7% of value sales through illegal unlicensed manufacturers, mainly producing low-cost spirits.Tax leakage and smuggling were the lowest categories in volume terms, accounting for 4.0% and 4.2% and 6.8% and 9.6% in value terms respectively. The largest category in terms of fiscal loss was illicit distilled homebrew, which represented 78.5% in value terms, followed by counterfeit at 12.1%.Surrogate is not present in Tanzania as even the poorest among the population have access to very cheap alcoholic beverages – legal or illegal. Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Illicit volumes are driven by illicit homebrew’s low cost and availability TANZANIA ILLICT ALCOHOL OVERVIEW Composition of alcohol market in volume terms (HL LAE) by type of beverage in 2015 In Tanzania, clear beer/lager/cider dominates the licit alcoholic beverages market with 53.6% in LAE volume terms in 2015, followed by spirits with 42.4%, opaque beer with 3.1% and wine (0.9%) . Artisanal illicit homebrew accounted for the majority share of 83.3% of illicit alcohol in LAE volume terms, mainly due to the low cost and ready availability of illicit distilled homebrew sold across many legal/illegal outlets.Illicit fermented homebrew accounted for 24.3% of illicit homebrew market volume. Spirits excluding distilled homebrew accounted for 16.2% in 2015, while wine and clear beer/lager/cider were the least affected by illicit alcohol activities, representing 0.3% and 0.2% respectively. Smuggling of ethanol accounted for 2.1% in LAE volume terms and was included under the spirits category. LICIT (49%)345,318 HL LAE ILLICIT (51%)355,050 HL LAESource: Euromonitor ConsultingClear Beer/Lager/CiderOpaque BeerSpirits Wine Illicit Alcohol Illicit Homebrew Spirits excl Distilled Homebrew Clear Beer/Lager/Cider Wine Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Clear beer/lager dominates licit and artisanal homebrew illicit market value Composition of alcohol market in value terms (US$’ mn ) by type of beverage in 2015 In value terms, clear beer/lager/cider held the majority of the licit alcohol market in 2015 with 66% , followed by spirits (33%), opaque packaged beer (1%) and wine (0.4%). In the illicit alcohol market, illicit homebrew led with 77.9% in value terms in 2015 , made up of fermented and distilled homebrew respectively. Spirits (excluding distilled homebrew) follows with 19.6%, clear beer/lager/cider (7.9%) and wine 1.7%.Opaque beer equivalent (fermented beer using sorghum, maize, fruit and banana wine as a base ingredient) is illegally made, and categorised under artisanal homebrew. LICIT (78%)US$1,239 millionILLICIT (22%)US$353 million Source: Euromonitor ConsultingClear Beer/Lager/CiderOpaque BeerSpiritsWine Illicit Homebrew Illicit Alcohol Wine Spirits excl Distilled Homebrew Clear Beer/Lager/Cider TANZANIA ILLICT ALCOHOL OVERVIEW Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Illicit spirits dominate across the illicit activity categories in volume terms Composition of market volume – alcohol type in 2015 Illicit homebrew is the largest illicit category, driven by illicit distilled and fermented homebrew beverages. Distilled homebrew is illegally made by illegal producers using multiple ingredients and unhygienic methods, sold in cups across formal/informal licenced and unlicensed outlets. Fermented homebrew is made mainly for cultural and ceremonial reasons, but is also sold commercially. Counterfeits of finished branded and unbranded goods are mostly made up of economy/low-priced spirits sold in 50/100ml sachets and 200/500ml bottles. Molasses, sugarcane, various types of fruit and illegally-obtained neutral alcoholic spirits (ethanol) are amongst the ingredients used. Packaging labels, empty re-used bottles and revenue stamps are forged or illegally obtained through corruption and bribery of staff with access to such materials. Smuggling of clear beer, ciders, wine and premium spirits is popular, conducted along Tanzania’s many porous country borders and the Indian ocean coastline. The smuggling cartels are well connected, with good knowledge of import procedures, bribe officials, and are known to transport their goods via army vehicles to various end locations. Tax leakage occurs via local legal spirit producers who produce economy/low priced-spirits. There is a mismatch of excise-paid revenue based on production recorded spirit volumes to the availability of economy/low-priced alcohol inventory distributed or found across formal and informal retail outlets. Source: Euromonitor Consulting TANZANIA ILLICT ALCOHOL OVERVIEW Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Illicit spirits and fermented homebrew volumes are greater than licit volumes Composition of market volume by beverage – licit vs illicit in 2015 89 % Illicit opaque beer 11 % Licit opaque beer 100% commercial fermented homebrew 100% smuggled65% Illicit spirits35 % Licit spirits79% commercial distilled homebrew11% industrial manufacturing5% tax leakage5% smuggled0.3% Illicit clear beer/ciders99.7% Licit clear beer/ciders100% smuggled 24 % Illicit wine 76 % Licit wine TANZANIA ILLICT ALCOHOL OVERVIEW Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Counterfeit low-cost spirits are increasing the binge-drinking culture 30,231 HL LAE US$20.1 million US$13.3 million Counterfeit and illicit brands represent around 8.5% of illicit volumes and 5.7% of value , equivalent to US$20.1 million in 2015. The fiscal loss of counterfeit illicit activities amounts to a fiscal loss of US$13.3 million. Within counterfeit and illicit brands, industrial production of branded and unbranded spirits represented 99% of the category in volume terms and refill for the remaining 1% in 2015. Within substitution/refill, premium and super-premium brands of spirits across on-trade are sometimes refilled/diluted with cheap legal and illegal alcoholic beverages, as well as water. For example, expensive spirits sold in tot-sized glasses are often diluted late at night in bars and nightclubs to extend spirits’ contents. Diluting of beer does not really occur but wine dilution takes place across on-trade outlets, albeit in minimal instances.The category was driven by counterfeit illicit spirits’ production, which accounted for 100% of the affected alcohol type. Local spirits brands Konyagi and Kiroba Original in bottles (200/500ml) and mostly sachets of 50/100ml are popular counterfeited products. Other counterfeited brands include Valuer (brandy) and K-Vant (gin). The sachets, which are freely available, are easily hidden, abused by young unemployed youths, and have become part of the binge-drinking culture in Tanzania.Industrial production of branded and unbranded spirits dominates the categorySource: Euromonitor Consulting SmugglingIllicit HomebrewCounterfeitTax LeakageTANZANIA ILLICT ALCOHOL OVERVIEWUnderstanding the Extent and Nature of Illicit Alcohol in Tanzania

Illegal manufacturing targets mostly low-cost spirits brands sold in plastic sachets Counterfeit illicit spirits’ ingredients are made mostly from molasses and sugarcane Counterfeit alcohol production is big in Tanzania, mostly for distilled alcohol products. The majority of the counterfeit products are illegal branded and unbranded spirits which are industrially manufactured and mainly sold in plastic sachets, popularly known as “viroba”. The counterfeit products are willingly sold with legal alcohol across legal/illegal on/off-trade outlets. Sugarcane and molasses are mostly used by illegal manufactures as the base ingredients for counterfeit products. A proportion of counterfeit and illicit brands are also produced from illicitly imported/locally-obtained ethanol during transport to end-users. Illegal manufacturing of low-cost local spirits concentrates largely on the Konyaki (also known as Konyagi Mwitu) brand, a Tanzanian drink in the form of liquor with an alcohol content of 35%, sold in plastic sachets in various volumes but mostly 50ml and 100ml . Counterfeits are marketed as the original Konyaki, as unregistered companies use sachets and old bottles with false labels and tax logos. As the companies are unregistered there is no tax paid on any production volume. Konyaki in bottles as well as well-known international medium to super-premium whiskey and vodka brands such as Grants and Smirnoff are also, to a lesser extent, the target of on-trade establishments, allowing counterfeiters to reap more benefits by refilling, using a mixture of cheap illegal and legal spirits (e.g. gongo) and water. The contents of these fake bottles of spirits end up being around 10-35% alcohol. Industrial manufacturing of spirits including the mass production of viroba is mainly located in Dar es Salaam, but also situated in Pwani, Arusha, Mwanza, Mbeya and Kilimanjaro/Moshi. Consumption prevalence is higher amongst male consumers aged 16-40. In Dar es Salaam, consumption of sachets by secondary school students is of particular concern. These students drink at school and become problematic. Bodaboda motorcycle drivers who transport people also abuse the sachets and are known to be intoxicated when transporting passengers, causing a high level of accidents.Illegal manufacturing targets mostly low-cost hard liquor sold in plastic sachetsMass production of counterfeiting best-selling brands is widespread across the countryRelevanceBeverages and Brands WhereTANZANIA ILLICT ALCOHOL OVERVIEWUnderstanding the Extent and Nature of Illicit Alcohol in Tanzania

Uncontrolled availability and affordability of sachets are major drivers Higher excise duty on alcoholic beverages and uncontrolled unavailability of counterfeit sachets has fuelled demand Due to the lack of government enforcement and difficulty in implementation due to a high incidence of bribery and corruption across the illegal counterfeit supply network, illegal industrial manufacturing of low-cost spirits has increasingly drawn new illicit distilleries to set up operations to generate high profits. e.g. in the Manzese, Mbagala and Mabibo areas. Due to harsher economic times, higher excise duty on alcoholic beverages (particularly beer) in recent years , and the consequent increase in prices has caused on-trade establishments to increase the offer of relatively cheaper alcohol options, including counterfeiting products, to meet demand from low-income and younger consumers. Even the banning of on-trade drinking during working hours has not deterred growth due to the uncontrolled availability and affordability of the small plastic spirits sachets across both on- and off-trade outlets. Sachets can be easily hidden in the pocket, and the drinks are colourless, making it easy to pour them into a water bottle and freely consumed.Counterfeit spirits infiltrating the market hamper the reputation for quality of well-known brands.Health and safety regulations are not enforced for the manufacturing of spirits, such as establishing clear limits on the levels of alcohol content, which in turn negatively impacts on the health and well-being of consumers.Counterfeit products damage the reputation of quality brands and represent a health issue“Tanzania is experiencing the same increasing problem with hard liquor sold in plastic sachets as a number of other countries in sub-Saharan Africa, which have already banned it. The problem has grown dramatically in recent years and now people have small factories even in their homes, where they are packaging these counterfeits and passing them off as the original drinks. Sometimes they get the TBS logos/stamps and branded packaging materials from unscrupulous employees. Other times they print them. Products are difficult to tell apart from the legal goods.”- Governmental Organisation representative Drivers Effects TANZANIA ILLICT ALCOHOL OVERVIEW Understanding the Extent and Nature of Illicit Alcohol in Tanzania

Illicit homebrew represents the largest proportion of total consumption in both volume and value terms 295,765 HL LAE US$275 million US$86.4 million Illicit homebrew accounts for the largest illicit activity in terms of LAE volume (83.3%) and value (77.9%). It consists of illegally produced distilled and fermented homebrew. Traditional fermented artisanal beer production is not considered an “illegal” activity by officials as it is entrenched into the cultural habits of the many tribes in Tanzania. Each region uses different ingredients for the beers, sold in close proximity to where it is made, to friends, people in the community in homes or community areas. Traditional beers can be made from bananas, pineapples, other fruit, millet, sorghum and maize. Distilled homebrew alcohol (known as “gongo”) production is considered illegal by the government , and accounted for the largest share, 71%, in LAE volume terms in illicit homebrew in 2015. Illicit distilled homebrew represented 78.5% of total fiscal loss in 2015 or US$86.4 million across illicit activities. Fermented homebrew (29% of the category) is an opaque beer equivalent for which excise is not charged, therefore no excise rate or fiscal loss has been applied to fermented homebrew.Source: Euromonitor ConsultingSmuggling Illicit HomebrewCounterfeitTax LeakageIllicit distilled homebrew is larger than fermented homebrew even though fermented homebrew is not deemed “illegal” by officials.TANZANIA ILLICT ALCOHOL OVERVIEWUnderstanding the Extent and Nature of Illicit Alcohol in Tanzania

Contact details Jem GoldenSenior Consultantjeremy.golden@euromonitor.com