A 20% levy on high-alcohol beer could put a rocket under SA’s illicit trade, warned South African Breweries.
But the National Treasury and SA Alcohol Policy Alliance believe a tiered system linking price to alcohol content may help put the brakes on binge-drinking.
South African Breweries (SAB) fears the beer industry risks being overrun by the black market if Treasury follows through on its plan to hike taxes by 20% for beer with higher alcohol content in a bid to channel consumers to low-alcohol beers.
The proposal will see beer with 4%-6% alcohol by volume -- a measure of a drink’s total volume of pure alcohol or ethanol -- attract higher taxes.
The Treasury proposal would see prices of popular SAB brands including Castle Lager, Black Label, Hansa Pilsner and Castle Milk Stout shoot through the roof.
The company, owned by JSE giant AB InBev, fears it will drive consumers to cheaper illicit beers that are already a big factor in the market.
The proposal might wipe more than R2bn in sales, according to SAB projections.
In its submission to the National Treasury, SAB -- which fetched a R1.4-trillion price tag when it was acquired by AB InBev a decade ago -- said illicit beers are already 37% cheaper.
The new tax will widen the price gap, push consumers towards the illicit market and create instability in the beer segment, which remains the backbone of excise revenue, SAB argued.
A fatal flaw in the proposal is its assumption that consumer behaviour will immediately shift to lower-alcohol products, it said.
“A 20% excise increase on a standard beer would intensify affordability pressures — reinforcing down‑trading behaviour and increasing the risk of substitution with illicit alcohol,” the submission reads.
“A 55% increase in the last five years in volume of illicit alcohol has increased competition with legal beer. The excise policy environment remains key to protecting legal taxed beer.”
SA is Africa’s largest beer market at about $24.73bn in 2024, and is expected to grow to $55.9bn by 2035.
SAB dominates the SA beer industry with an estimated 70% market share by volume.
Zoleka Lisa, SAB corporate affairs VP, believes the threat posed by illicit alcohol represents about one in every five alcoholic drinks in SA.
“SA cannot tax its way to better public health outcomes if illegal alcohol fills the gap,” she argued.
“Every rand added to the cost of a legal product is a competitive advantage handed to illicit traders who pay nothing — no excise, no VAT, no compliance costs.
“Smart excise reform and tackling illicit alcohol are not separate conversations.
“SAB remains committed to working constructively with the National Treasury to design a framework that delivers public health, protects fiscal revenue and preserves SA’s legitimate, job-sustaining alcohol industry.”
The SA Alcohol Policy Alliance (Saapa) has come out in support of the Treasury’s proposed beer excise tier system to improve public health outcomes.
Nomcebo Dlamini, campaign director at Saapa, said SA cannot continue to treat alcohol primarily as a revenue source while communities face escalating harm.
“SA continues to experience severe alcohol-related harm driven by high levels of binge and heavy episodic drinking.
“National Treasury estimates about 59% of drinkers engage in heavy episodic drinking, with beer the most widely consumed alcoholic beverage in SA,” Dlamini said.
“Given beer’s dominance, Saapa SA emphasises that targeted reforms to beer pricing and alcohol strength are critical for achieving meaningful public health outcomes.
“The proposed system is expected to incentivise manufacturers to reduce alcohol strength while discouraging the production and consumption of higher-strength beverages linked to greater harm.” — Business Day
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