While South Africa’s alcohol industry expects serious consequences — even devastation — if proposed government changes in excise tax are implemented, top researchers welcome the increases, citing positive public health benefits.
“The timing and scope of these proposed taxation changes could not be more challenging for our industry,” says South Africa Wine CEO Rico Basson. “We’ve prepared an extensive submission demonstrating these changes’ severe implications across our entire value chain.”
In November the National Treasury published a discussion document on changes to the taxation of alcoholic beverages. The deadline for comment is February 14.
The document indicates the changes are a response to the World Health Organisation’s (WHO’s) view that alcohol is harmful to health and that there is “no safe level of consumption”.
The WHO reports alcohol causes 5.3% of global deaths every year and is linked to more than 200 diseases and injuries. It recommends that excise tax increases focus on reducing affordability and, therefore, consumption. South Africa’s excise taxes are 11% for wine, 23% for beer and 36% for spirits. Proposals include increases to 16% for wine, 28% for beer and 42% for spirits.
“There is substantial research showing that increasing alcohol taxes is the most effective way to curtail alcohol harms,” says Prof Charles Parry, an international scientific adviser on alcohol policy.
Parry led the Mental Health, Alcohol, Substance Use & Tobacco Research Unit at the South African Medical Research Council from 2001 to 2024 and has published extensively on alcohol policy.
He is in favour of policy recommendations set out in the discussion paper because these will help to address the “negative externalities” associated with alcohol use, which is a major public health concern in South Africa and other African countries.
“Based on my research I also believe there is a place for instituting minimum unit pricing on alcohol products given the widespread abuse of cheaper products such as bag-in-box wines and larger containers of beer which cannot be resealed.
With 80% of South African wines having alcohol content above 9%, we’re looking at a staggering 72% weighted average increase in excise rates across the industry.
— Rico Basson, CEO: South Africa Wine
“In determining policy options, it is also useful to consider that consumer pushback on policies that will increase the price of alcohol may not be as great as expected.”
South Africa Wine acknowledges the serious diseases resulting from alcohol misuse and recognises the importance of reducing harmful consumption, though Basson notes the new proposals include an 80% tax hike on wine that has an alcohol level of more than 9%.
“With 80% of South African wines having alcohol content above 9%, we’re looking at a staggering 72% weighted average increase in excise rates across the industry. This is unsustainable for many producers,” Basson says.
He points to initiatives led by the alcohol industry to reduce harm under the auspices of Aware.Org and the Drinks Federation of South Africa. South Africa Wine proposes that the Treasury focus on the illicit alcohol trade to reduce illegal consumption and recover excise revenues.
Fears of the potential burgeoning of the illicit alcohol trade as a result of “poorly thought through tax increases” are echoed by Phillip Retief, CEO of Van Loveren Family Vineyards and vice-chair of Vinpro, which represents about 2,600 South African wine grape producers, cellars and wine-related businesses.
Van Loveren recently won the Wesgro 2025 wine tourism ambassador award for diversity in recognition of its contribution to sustainability and innovation.
Retief points to the post-Covid growth of the illicit tobacco industry “which no-one can put a finger on” and says he fears the emergence of an underworld mafia-type wine trade if taxes are raised too high, too quickly.
Charlene Louw, CEO of the Beer Association of South Africa, says “robust, in-depth consultation” on the discussion paper will bolster the development of a fair, transparent excise policy that supports the growth of the sector, which includes craft breweries and other SMMEs.
Basson and Louw point to the contribution the wine and beer industries make to employment and GDP, with wine bringing in R56bn a year and beer R70bn.
Economist Nicole Vellios of the University of Cape Town’s Research Unit on the Economics of Excisable Products says a recent report by the unit estimates the costs of alcohol use in South Africa to society were between R245bn and R280bn in 2009 (10%-12% of GDP).
Included in these costs are tangible costs (health care, treatment, research and prevention, social and welfare costs, crime response, crime consequence, crime anticipation, road traffic accidents), and intangible costs (premature mortality and morbidity, absenteeism and nonfinancial welfare costs).
She calculated the total revenue from alcoholic beverages for the 2022/2023 financial year to be 2.5% of GDP.
The research unit’s recommendations to the National Treasury include implementing a minimum unit price for alcohol (the lowest retail price for an alcoholic drink); reviewing the taxation on wine; and increasing the excise tax on beer, given that it’s the drink of choice among South Africans who drink excessively.
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