The spirits company, Diageo calls for a pause in spirits tax increases. Government tax on spirits is expected to pass the significant R100 per 750ml bottle mark, should the Minister of Finance, Enoch Godongwana, apply the usual 6%-plus annual increase in excise during the Budget Speech next week.
Diageo calls for a pause in spirits tax increases
750ml is the main unit size offering to the market for all subcategories of spirits – brandy, gin, vodka, whisky and rum.
“At R100 per bottle, government tax becomes the biggest component of the cost to the consumer, ranging between 55-65% of the retail selling price of mainstream spirits products. We believe there is no room for consumers to absorb further increases in the statutory component of the price,” said Sibani Mngadi, Corporate Relations Director at Diageo South Africa.
Tax on spirits have practically doubled from R52 per bottle in 2016 to most likely over R100 with the presentation of the 2026 Budget Statement.
The spotlight is on possible spirits tax increases
Tax-evading illicit traders turn this large tax burden to the benefit of their own criminal networks, offering smuggled and counterfeited spirits at less than 50% of market prices. The large tax increases on spirits over many years have directly facilitated the exponential growth of illicit trade, which now stands at 18% of the alcohol market.
Spirits is, by far, the most smuggled and counterfeited category of alcohol. Illicit trade in spirits causes an R11 billion loss in tax revenue for the government every single year, according to a 2025 Euromonitor study.
Calling for a freeze on excise tax increases for spirits products
Diageo South Africa, the country’s leading spirits company, has called for a freeze on excise tax increases for spirits products, while the excise tax policy is still under review. In its policy review document on the Taxation of Alcoholic Beverages, Treasury itself acknowledges that spirits is taxed much more heavily than other categories. The Treasury review document concluded:
“For now, no further adjustments [of excise tax] are proposed for consideration for the spirit category.”
Mngadi argued that: “If the excise tax is intended to moderate the overall volume consumption of alcohol in the population, a similar rate per litre of absolute alcohol should apply, irrespective of whether that alcohol is from a distilled or fermented alcoholic beverage.”
Curb illicit trade and protecting government revenue
Diageo South Africa is committed to engagement with government and industry partners to develop a fair, evidence‑based excise regime that supports responsible consumption while curbing illicit trade and protecting government revenue.
According to Mauritz Venter from Resolve Communications, Diageo South Africa is the country’s leading spirits company. It supports thousands of jobs directly and indirectly through local production of most of its SA volumes, as well as the nationwide distribution and sales of its iconic brands.
Excise Tax rates currently applicable for alcohol as per 2025/2026 Budget Statement are:
- Spirits = R292,91 per Litre of Absolute Alcohol
- Beer/Cider = R145.07 per Litre of Absolute Alcohol
- Wine = R5,95 per Litre of finished product (irrespective of ABV level)
Diageo is known for its international brands such as Smirnoff, Gordon’s, Tanqueray, Captain Morgan, Johnnie Walker and a variety of other blended and single malt whiskies.
