For the first time, the Government has disclosed the true loss to the Exchequer from the soaring bootleg trade. A parliamentary answer from Phillip Oppenheim, the Treasury minister, reveals that something that began innocently enough, with day-trippers loading up their trolleys in hypermarkets in Calais, last year accounted for pounds 1.06bn in lost duty and VAT.
Of that total, pounds 290m was from ordinary people buying booze and tobacco, and pounds 770m was lost as a result of organised smuggling.
Not surprisingly, given the business's growth and the profits to be made, major criminals have moved in. Pub landlords are now being forced to sell "Eurobooze" by gangs who threaten them with violence if they refuse.
Peter Miller, the buying director for alcohol for the Booker cash-and- carry chain, said: "We believe in our own discussions with Customs and Excise that organised crime is involved in this activity."
Another industry source, who asked not to be named, said he knew of pubs, mainly in the London area, where landlords had been intimidated into selling the cheap booze.
"They come in in the mornings and slam it down. They tell him to sell it and they will be back in two weeks for payment - or else," he said.
The favourite product is said to be whisky, which the criminals are selling to the pubs for pounds 40 a case.
Landlords in Birmingham, Manchester and Glasgow have also been threatened. Brian Finnerty, spokesman for the Brewers and Licensed Retailers Association, said he was worried publicans were too scared to report the threats.
"This is big money for people, and it is attracting the organised criminal who is prepared to use violence to increase his profits."
Customs are so concerned they have set up a 24-hour helpline for people offered bootleg booze or threatened. They have also had to resort to lengthy undercover investigations to penetrate the organised gangs and trace the people responsible for financing them.
One gang that was exposed was found to be armed. Another group is suspected of beating a prosecution witness to death.
A recent report by the business consultants London Economics found that lorry drivers who were prepared to work full time at beer-smuggling could easily make pounds 30,000 a year. Customs believe that some of the most efficient smuggling operations are making as much as pounds 18,000 a day.
As one Customs investigator put it: "The major problems are no longer with the Jack-the-lads selling the stuff at car-boot sales. The racket is being taken over by organised criminals with a chain of outlets in nightclubs, off-licences and illicit drinking dens."
Gangsters who once traded in drugs have switched to smuggling alcohol because the penalties have been minor while the potential profits have been enormous.
The risks to the men who put up the money to finance the racket are minimal, as they recruit a small army of minibus and lorry drivers to make the cross-Channel crossings on their behalf.
Even the couriers are in little danger of prosecution. They often use hire vehicles so that there is no threat of confiscation and many drivers who have been caught have been able to avoid further action by paying duty on their cargo.
Typical of the new criminal beer barons is Ellis Martin, who amassed five properties and a pool of 17 cars as a result of his drink-smuggling operation. Martin set up 37 bank accounts and used a team of accountants to disguise the huge turnover he was generating from the racket.
Martin assembled a fleet of container lorries to move an estimated nine million bottles of beer, generating some pounds 5m in unpaid VAT.
Martin, 37, who lived in a detached house with its own swimming pool in north London, was arrested after Customs put him under surveillance in Operation Jeroboam, an investigation they they carried out with counterparts in France.
When Martin appeared at the Old Bailey, he described himself as a "commodity broker" and produced 700 pages of documents that purportedly showed the beer had been legitimately exported to France, Russia, Portugal and Nigeria. All the documents were proved to be forgeries.
Neither did the court believe Martin's claim that he had made only pounds 1m from the drinks operation. The judge ordered him to pay a pounds 3.3m confiscation order and sentenced him to six years and 10 months imprisonment.Reuse content