A group of man sitting together in Soweto, South Africa (Photo: Marco St, Unsplash)
10 March 2021

South Africa hikes excise above rate of inflation

South Africa | It took brewers by surprise that the Government, without a warning, increased the excise duties on alcohol and tobacco products by 8 percent in its 2021 budget. The government argued this was to discourage their consumption and promote good public health.

AB-InBev-owned SAB said in a statement on 25 February 2021 that the move was “yet another blow following a series of setbacks that the beer value chain has had to weather over the last 12 months, including 19 weeks of sales bans, culminating in a loss of more than 200,000 jobs [1.2 percent of national employment] and ZAR 52 billion [USD 3.4 billion] lost in GDP contribution [1 percent of GDP at market prices].”

An industry on its knees

“The announcement means that tax on beer will increase by almost double the rate of inflation. In a time of unprecedented economic hardship, this decision will fundamentally impede the recovery of a value chain already on its knees.”

SAB raised similar concerns to British American Tobacco SA (Batsa) about the sin tax hikes, saying the hike would “inadvertently fuel the consumption of illicit [and often dangerous] substitutes, which have become prevalent and more available as a result of the recent ongoing alcohol bans.”

AB-InBev’s CEO Carlos Brito commented during the brewer’s Full Year results presentation on 26 February that “this [hike] is in direct contradiction with the government’s current alcohol excise policy, which is to increase excise in line with inflation. So, we were quite surprised by that. But again, we will continue to work closely with the government to help the South African community and our consumers to get to a better place – but with measures that really are connected to root causes and not unlawful measures.”

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