South African Brewers Challenge Proposed Alcohol Excise Tax Overhaul
South African Breweries is urging National Treasury to make inflation-linked increases the baseline for beer excise duties. The brewer warns that proposals allowing annual increases of up to 10%, alongside a proposed 20% rise in the standard beer rate, could threaten jobs, constrain investment and expand illicit alcohol sales.
Beer industry pushes for predictable excise policy
South Africa’s beer industry is challenging National Treasury’s proposed overhaul of alcohol excise duties, warning that higher taxes could put jobs at risk, weaken the legal market and encourage illicit alcohol sales. Consultations are continuing with producers, civil society groups and other stakeholders.
South African Breweries (SAB) is calling for a predictable framework in which beer excise increases are linked to inflation. Fatsani Banda, SAB’s senior manager for Excise and Public Policy, told Eyewitness News that the policy debate follows a ten-year period without a review of excise policy. The company argues that tax certainty would give brewers and other businesses a firmer basis for investment and production planning.
According to Banda, Treasury increased excise duties in line with inflation only three times during the past 12 years. SAB says inflation-linked adjustments should become the baseline rather than an occasional outcome. Banda also noted that South African increases have not declined with inflation and cited Canada and the UK as countries with a more rationalised approach.
Proposals raise concern over legal-illicit price gap
SAB has objected to policy proposals that it says are not aligned with the consumer price index. Banda said Treasury had presented possible increases of up to 10%, which could translate into a 10% annual rise. The brewer has also highlighted a proposal for a 20% increase in the standard beer rate.
The company’s central concern is that above-inflation taxation would widen the price difference between regulated products and illicit alternatives. Excise duties account for a significant part of that gap, according to SAB. A larger difference could make untaxed alcohol more attractive to price-sensitive consumers while reducing sales and revenue in the compliant market.
That argument has implications beyond brewers. Legal producers, distributors and retailers bear regulatory and tax costs that illicit operators avoid. If consumers move toward unregulated products, compliant companies face pressure on volumes, employment and investment, while the government may collect less revenue than expected from higher rates.
Illicit market adds pressure to Treasury debate
Eyewitness News reported SAB’s citation of Euromonitor estimates showing that illicit alcohol cost South Africa’s fiscus R16.5 billion in lost value-added tax and excise revenue in 2024. Illicit volumes have increased by 55% since 2017, according to the same estimate. SAB wants Treasury to take that expansion into account before making above-inflation increases a permanent feature of excise policy.
The debate places revenue, public-health objectives and the sustainability of the formal alcohol industry in direct tension. Supporters of higher alcohol prices argue that they could curb heavy drinking. SAB maintains that tax policy must also consider consumer behaviour, legal-market viability and whether higher prices will redirect demand to illicit suppliers.
National Treasury’s final framework will determine whether brewers receive the inflation-linked predictability they seek or face steeper recurring increases. For producers and investors, the key questions are the eventual rate, its adjustment mechanism and its effect on legal demand. For the government, the test will be whether higher duties raise revenue without accelerating a market that already generated substantial tax losses in 2024.
