It is open season on price hikes at the foot of Africa with wine, spirit and beer lovers having to absorb increases in both excise duty and general retail prices.
Finance minister Trevor Manual hiked duties by between 10% and 11%, which were in line with a new strategy worked out with the liquor industry over the past two years.
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Beer and cider duties rose by 10%, as did spirits and fortified wines, while natural wine went up by 11%. For the second year running there were no hikes in traditional sorgum beer duties.
Wine and spirit giant Distell warned retailers earlier in the year that from today its annual increase would also kick in and together the wholesale increase and excise hikes would come to between 8% and 10% for its range of products.
South African Breweries products went up on average by about 7% earlier in the month.
Corporate affairs director for Distell, André Steyn, said no increases were ever welcome, but excise hikes were what the company expected.
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By GlobalData
South African Breweries marketing director Peter McLoughlin said he was disappointed at the disproportionate burden malt beer drinkers had to bear, relative to wine and sorghum drinkers regarding the increases.
These increases follow two-year consultations between all the major role players in the alcoholic beverage industry and the government to work out a formula for the structure of taxation on alcoholic beverages.
It was decided that the total tax burden (excise and VAT), as a percentage of the weighted average retail price for spirits (including spirit coolers), clear beer and wine be set at 43%, 33% and 23% respectively.
The tax incidence for the first nine months of a given fiscal year would be used as a reference point for the annual adjustments in excise duties for each category of alcoholic beverage. However, the actual adjustment in excise duties would be calculated on the tax burdens derived from projected prices for the next fiscal year of the expected consumer inflation rate, which ever is the higher.
