Although finance minister Trevor Manual presented what he called a "sweet taste of liberty" budget to the nation, South Africa's drinks industry was dealt the "bitter pill" of higher excise duties.

In general he offered a number of incentives to tax payers but the government was set to recoup some of that money through higher excise duties.

Manual announced the following duties:

  • Beer and cider taxes were increased by 6% or 2.3 cents a can, in line with inflation.
  • Sorghum beer and sorghum flour duties were increased by 5%, which was below the rate of inflation. Duties on these products had not been raised for 2 years.
  • Duties on all other alcoholic beverages were raised by 10%. This means that there was a R3.03 increase for a litre of spirits, while 750 ml of fortified wine went up by 15 cents and natural wine by 6.7 cents.

The only area to experience some relief was the non-alcholic sector, with duties on soft drinks and mineral water reduced by 25%, or 2 cents a litre.

Corporate Affairs Director for Distell, Andre Steyn, said: "We have to question why Mr Manual discriminated between the beer sector and the rest of the industry and spirits in particular.

"It must also be borne in mind that this is a market in decline, with alcoholic beverages on the whole dropping 10% and brandy sales over the past three years dropping 25%.

"It is highly irresponsible and will have an impact on not only volumes, but jobs as well. Our company alone is responsible for contributing R1 billion to the state's coffers, so one would expect a more responsible reaction and respect for the industry.

KWV's chairman, Lourens Jonker commented that the state, which already made more out of the wine industry than producers, was "killing the goose that lays the golden egg", which unfortunately also resulted in less job creation.