Cape Town – As South Africa prepares for the 2026 national budget, the beer industry has warned that another above-inflation increase in excise taxes could place severe pressure on small brewers, threaten jobs and drive consumers toward the illicit alcohol market.
The warning comes amid ongoing engagement between industry stakeholders and National Treasury ahead of Finance Minister Enoch Godongwana’s budget speech scheduled for 25 February.
Discussions include proposed tax changes that could see excise duties on beer rise sharply, with increases on standard beer products potentially reaching around 20%.
According to Business Explainer, Treasury’s consultations with alcohol producers form part of a broader review of alcohol taxation aimed at addressing public health concerns and alcohol-related social harm. However, the proposals have revived long-standing tensions between industry and government over the economic impact of excise hikes.
Industry representatives quoted by IOL said beer producers already face “a double tax burden” through corporate income tax and excise duties, which they argue limits their ability to plan, invest and grow.
“While government may argue that excise is meant to influence consumption, the data shows a more troubling outcome,” the industry said, adding that repeated above-inflation increases have placed small brewers under significant financial pressure.
Industry bodies have further cautioned that higher retail prices could push consumers toward the illicit alcohol market, which already accounts for a substantial portion of alcohol consumption in South Africa.
Public health groups, however, maintain that excise taxes are an effective mechanism for reducing harmful drinking.
According to Business Explainer, organisations such as the South African Alcohol Policy Alliance (SAAPA) argue that higher prices generally reduce consumption and could ease pressure on the healthcare system by lowering alcohol-related harm.
The beer industry supported an estimated 210 000 jobs and contributed approximately R98 billion to South Africa’s GDP in 2023, with economic activity spanning agriculture, logistics, retail and hospitality.
“Certainty in excise policy allows companies to plan ahead, invest with confidence, and continue driving employment across agriculture, packaging, logistics, retail, and hospitality,” the industry said, calling on Treasury to adopt a predictable, CPI-linked excise framework rather than imposing large above-inflation increases.
National Treasury is expected to outline its final position on excise duties in the 2026 budget.
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Compiled by Lisabeal Nqamqhele
