The whisky market in Colombia, valued between USD 400-500 million, is facing severe challenges due to rampant liquor smuggling. Whisky, a popular beverage in Colombia, is also the most widely smuggled alcoholic drink in the country, contributing significantly to the illegal trade in alcoholic beverages. 

“It is estimated that around one in five bottles of liquor in the country are illegal,” reported a consultant on customs issues, including alcoholic beverages. “Through different operations by the Tax and Customs Police, a bottle of illegal liquor was seized every six minutes.” Recent data indicates that approximately 30-40% of the whisky consumed in Colombia is smuggled, translating to an annual value of USD 120-200 million.  

The problem has been exacerbated by recent economic conditions, as addressed by the customs consultant, “The industry almost went bankrupt when the pandemic hit,” which intensified the demand for cheaper illicit products. “The pandemic favoured the strengthening of the illegal trade in alcoholic beverages and Colombia became one of the countries most affected.” The consultant expanded, “The situation regarding whisky smuggling was already particularly worrying with whisky smuggling figures exceeding those of whisky imports.”  

“The situation regarding whisky smuggling was already particularly worrying with whisky smuggling figures exceeding those of whisky imports.”

Consultant on customs, including alcoholic beverages, Colombia

A report from the Colombian Federation of Liquor Departments (“Fedelico”) estimates annual losses due to smuggled alcohol, including whisky, at an eye-watering USD 200 million. “In Colombia, smuggling is estimated at 24% and is said to be the worst behind only Bolivia, Venezuela and Paraguay.” A CEO of a company importing alcoholic beverages in Colombia added, “In some regions of Colombia illegal armed groups consider smuggling as one of their sources of income.” 

The issue of illicit alcohol is widespread In Latin America. Across 14 countries, illicit alcohol represents 15% of total alcohol consumption, with a market value of approximately USD 4.844 billion and a fiscal loss of USD 1.693 billion. The exasperated CEO stated, “Smuggling in recent years has increased exponentially due to the new taxation system in 2017, where the tax burden has increased so much that smuggling has once again become a big problem.” The CEO confirmed, “before 2017 the figure in Colombia did not exceed 8%.” 

Recent reports highlight that criminal organisations use sophisticated methods to evade detection and enforcement, making it difficult for authorities to address the issue effectively. “All the time we see that there are constant police operations that seize alarming quantities of contraband alcoholic beverages.” The customs consultant surmised, “In the Copa America, important blows were struck against criminal structures, but this is not translating into effective convictions.”  

The illegal trade has substantial financial implications. This results in an estimated annual loss of USD 400 million in tax revenue for Colombia, a significant burden on the government. This loss is compounded by the broader impact on legitimate businesses, with major companies like Diageo facing considerable revenue losses. “I believe that specific actions that can help mitigate the risk is the implementation.” The alcoholic beverages customs consultant expanded “the implementation of traceability systems that not only track the product’s origin but also provide information on the entire supply chain.” The consultant also confirmed, “This has been implemented in the Dominican Republic and has had good results.” 

“Smuggling in recent years has increased exponentially due to the new taxation system in 2017, where the tax burden has increased so much that smuggling has once again become a big problem.”

CEO of a company importing alcoholic beverages, Colombia

The CEO of an alcoholic beverage importing company suggested, “Diageo could focus on emphasising to decision-makers in Congress that it does not compete with the sales of the local liquor,” specifically aguardiente (a distilled liquor resembling brandy made from sugar cane in South America). “Law 1816 of 2016 addresses the issue of department monopolies.” The CEO explained, “Congressmen raised taxes on imported whisky, believing it would protect departmental revenues, particularly from aguardiente sales.” However, this move has mainly encouraged smuggling and illegal mafias, with little effect on increasing tax revenue. 

Contaminated and unsafe products in the market further complicate enforcement and regulatory efforts, posing a serious risk to consumer safety. “This is a major public health problem.” The consultant informed, “At the end of 2022, many people died because they consumed adulterated alcohol, and this was all over the media.” However, it was noted that “consumers themselves, due to the loss of purchasing power, also sought cheaper options,” even knowing the possible repercussions. 

Combating whisky smuggling requires a substantial investment. The CEO suggested, “Governments can contribute by returning to the taxation before 2017.” The customs consultant added, “At the macro level, it is also key that the region’s governments can coordinate measures to detect the criminal structures that operate under this illegal trade in alcoholic beverages, as well as the online platforms that favour its distribution.”   

The smuggling crisis has deeply affected the whisky market in Colombia, with significant financial and safety implications. The high rate of illicit whisky consumption, driven by organised crime and exacerbated by regulatory challenges, undermines both legitimate business operations and public health. The CEO acknowledged, “It’s a tough fight.”