Vodka, or methylated spirits? News server uncovers ‘massive’ Czech drinks fraud

A Czech online news server made the remarkable claim on Tuesday that as many as one out of two bottles of spirits sold in the Czech Republic is made on the black market, depriving the state of billions of crowns in unpaid taxes and putting public health at risk. Distillers themselves admit the problem is huge, although they put the figure at more like one bottle in five – still an alarming trend.

The online news server Aktualne.cz has broken many big stories in recent years, and this one seems at first glance to be huge. Aktualne says it hired private detectives to track down the black market in illicit alcohol, and discovered sophisticated networks of criminal gangs knocking out huge volumes of knock-off spirits.

At the very lowest level, deserted cowsheds and disused sugar refineries have been converted into illegal stills, producing industrial quantities of ersatz vodka or rum by chemically altering denatured alcohol (sometimes known as methylated spirits) and adding artificial flavouring. These are then supplied to unscrupulous pub owners in barrels or bottled and sold in Vietnamese grocery stores.

Higher up the chain, counterfeiters are hard at work producing convincing copies of well-known drinks labels to add authenticity. And at the very top, warehouses and official distributors are involved in what Aktualne claims is a massive tax fraud involving billions of crowns.

Vladimír Steiner, head of the Czech Distillers’ Union, says in his view Aktualne’s figure of fifty percent is exaggerated, pointing out the Union’s own estimates talk of 15-25%. He explained the root of the problem.

“15-25% percent still represents a huge amount of money, but the problem is partly due to the relatively high excise duty on spirits in the Czech Republic. It’s much higher than in other European countries such as Italy or Spain, so illegal production is hugely profitable here. The laws themselves are very good – the problem is their application. They’ve been reducing the number of customs officers who check these things, and as soon as they do that, you see a rise in illegal production in the area concerned.”

Vladimír Steiner

Vladimír Steiner says most people will never notice the difference in their glass because the vast majority of illegally produced or untaxed alcohol is distributed wholesale to the pub and restaurant market and therefore the customer never gets to see the label on the bottle. He believes most bottles on sale in supermarkets and grocery stores are legitimate, although some obviously will be bootleg. And a final sobering thought – he doesn’t think the situation in the Czech Republic is radically different than anywhere else in Europe.