E-Malt.com News article: South Africa: South African Breweries warns 20% high-alcohol beer tax could fuel South Afica’s illicit trade crisis

South African Breweries (SAB) has warned that the beer industry risks being overrun by the black market if the National 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, Sowetan reported on June 8.

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 proposal by the National Treasury will see prices of popular SAB brands including Castle Lager, Black Label, Hansa Pilsner and Castle Milk Stout shoot through the roof.

The company, which belongs in the stable of JSE-listed AB InBev, is pushing back on the proposal, warning it will have unintended consequences and drive consumers to cheaper illicit beers that it says are already a big factor in the market.

Business Day understands 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 proposal will widen the price gap further, force consumers to the illicit market and create instability in the standard beer segment, which remains the backbone of excise revenue.

The submission states that one of the fatal flaws in the proposal is that it assumes that consumer behaviour will immediately shift to lower-alcohol-by-volume products, an assumption that it says is undermined by industry trends.

“A 20% excise increase on a standard beer would intensify affordability pressures — reinforcing down‑trading behaviour and increasing the risk of substitution toward illicit alcohol,” the submission reads.

“The 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 from further competition with illicit alcohol.”

South Africa is Africa’s largest beer market.

Data from Market Research Future shows that South Africa’s beer market size was estimated at $24.73bn in 2024 and is expected to grow to $55.9bn by 2035.

SAB dominates the South African beer industry with an estimated 70% market share by volume.

Zoleka Lisa, SAB vice-president of corporate affairs, said any proposed reforms must account for the growing threat posed by illicit alcohol which the company believes represents about one in every five alcoholic beverages in South Africa.

“South Africa cannot tax its way to better public health outcome if illegal alcohol fills the gap. 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,” she said.

“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 South Africa’s legitimate, job-sustaining alcohol
industry.”

The Southern African Alcohol Policy Alliance (Saapa) has come out in support of the National Treasury’s proposed beer excise tier system to improve public health outcomes.

Nomcebo Dlamini, campaign director at Saapa, said South Africa cannot continue to treat alcohol primarily as a revenue source while communities face escalating harm.

“South Africa continues to experience severe alcohol-related harm driven by high levels of binge and heavy episodic drinking. National Treasury estimates that approximately 59% of drinkers engage in heavy episodic drinking, with beer remaining the most widely consumed alcoholic beverage in the country,” 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.”


08 June, 2026