At a time when trade wars have the global wine industry worried about tariffs, South Africa is facing higher excise taxes imposed by its own government.
Today, the South African government announced a 6.75% excise increase on all alcoholic beverages.
“South Africa Wine is deeply disappointed by the government’s disregard for the wine industry in today’s budget announcement,” said a statement from South Africa Wine.
“Despite months of intense engagement with the National Treasury, where we presented clear evidence of the impact of excessive excise hikes, the Minister of Finance has proceeded with a tax regime that will negatively impact producers, accelerate job losses, and threaten rural economies.”
A tough tax burden
The proposed excise tax changes were outlined in the National Treasury’s Excise Taxation Policy Paper in November 2024, prompting months of negotiation from the wine industry.
“The timing and scope of these proposed taxation changes could not be more challenging for our industry,” Rico Basson, CEO of South Africa Wine, said when the changes were first proposed. “Our current excise tax burden already exceeds the target rate of 11% and is significantly higher than that of our competitor wine-producing nations.”
According to South Africa Wine, “the wine industry is already under significant financial strain, with an alarming increase in loss-making producers and rising operational costs.”
The industry reacts
Mike Ratcliffe, co-founder and owner of Vilafonté, one of South Africa’s most successful wineries, says the wine industry has been treated as an easy source of tax revenue for a long time. “Government authorities appear to feel that 'sin taxes’ are a politically palatable option,” he told Meininger’s. “The recent increase in South African tax on wine is regrettable, but not a new phenomenon, and certainly not uniquely South African.”
But, he says, “it will hurt the industry.”
Wine writer Michael Fridjhon says that most wineries “are increasing prices at 5-8%. So 6.8% isn’t on its own a killer. But it’s a problem for everyday wine drinkers.”
What it will do, he argues, is increase inequality. “The rich won’t mind and the poor will be driven to buy poorer quality or to buy from vendors who evade the excise collectors.”
Tax evasion is a significant problem in South Africa, and Fridjhon says this new excise will probably worsen it — which means the government is unlikely to make much money from this latest hike.
Fridjhon also suggested that the tax increase was the government “grandstanding to the anti alcohol lobby” as a way of justifying its recent increase to the Value Added Tax. On 1 May 2025, South Africa's VAT is tipped to rise to 15.5% from 15%.
According to South Africa Wine, the “wine industry remains a crucial contributor to South Africa’s economy, contributing a significant R56 bn (€2.8 bn) to the GDP, creating 270,364 jobs across the entire value chain, earning foreign exchange through exports, generating tourism revenue, supporting rural economic development, and supporting local communities.”
Yet the government has never been sympathetic to the industry, despite its export earnings. During Covid, for example, the government banned export sales of wine for five weeks, and banned domestic sales on three separate occasions, causing upheaval across the sector.
