A liquor store owner says that more than half the imported liquor consumed in Cuenca over the holidays will be illegal, smuggled across the borders from Colombia and Peru. “I believe it’s about 60% of all sales during the holidays and 50% normally, but in Quito, it’s 75% now,” says Rodrigo Garzón. “It’s like a flood and the government can’t stop it,” he adds.
An unnamed customs agent who works Ecuador’s border with Colombia told a Quito newspaper last month that most of the liquor purchased in the country is bootlegged. “There are thousands of small roads and trails across the border and we can only check a few of these,” he said. “The aduana catches less than 5% of it. The rest of it is sold on the black market.”
The agent said that some of the smugglers have large operations, with warehouse systems throughout the country. “Then, they have a network of sales people who have connections in the larger towns and cities,” he says. “Almost everyone who wants to buy smuggled liquor knows where to find it.”
Garzón, the Cuenca liquor store owner, says that the illegal trade makes it hard for him to make a living. “I’m only selling to the people who don’t know where to go to get the cheap bottles, and there aren’t many of them,” he says. “If you can buy a bottle for 40% of what I sell it for, why would you come here?” He says he gets by selling locally produced liquor and wine.
“When you have the kind of price difference between the legal, taxed liquor, and the smuggled liquor, there are people who will make money from it,” says the agent. “Ecuador has the highest taxes on liquor in South America and this creates opportunity.” As an example, he says the street price for a smuggled bottle of Johnnie Walker Red scotch is $25 to $30 while the legal bottle costs $55 to $60.
Garzón says that the smugglers are very aggressive in getting the word out about their services. “I see advertisements now in gringo websites for smuggled bottles,” he says. “They even use their names and phone numbers but the government doesn’t do anything,” he says. “The government focuses on people like me because I have an address. The illegal guys almost never get arrested.” (To see a recent ad aimed at expats, click here.)
The customs agent says the only thing that will stop the smugglers is if taxes go down. “This could happen next year when the free trade agreement with the European Union takes affect. Then, Johnnie (Walker scotch) will sell legally for the same prices that the smugglers charge today.”
He adds that the most popular smuggled liquor is Johnnie Walker Red Label with Black Label not far behind.