The impact of the wine excise tax increase will affect the entire local wine industry, from the producer to the consumer.
This is according to Yolandi Botha, agricultural economist at Vinpro, the non-profit representing nearly 2600 South African wine grape producers, cellars, and businesses.
“Wine grape producers have been facing immense cash-flow pressures, [which leads them to] opt for cost-cutting strategies such as employing less labour on farms,” said Botha.
This comes after the announcement on 12 March, during finance minister Enoch Godongwana’s delayed national budget speech, of an excise tax increase of 6.75% on all alcoholic beverages.
Industry raised alarm over concerns
The announcement comes despite warnings by South Africa Wine, the national body supporting the wine and brandy industry, about the long-term damage to the wine industry’s sustainability and competitiveness, and “months of intense engagement” between South Africa Wine and the National Treasury.
This is according to South Africa Wine, in a newsletter sent out after Godongwana’s address.
South Africa Wine and other industry stakeholders opposed the treasury’s decision after the release of the proposed changes in the Taxation of Alcoholic Beverages policy document. The document proposed an increase of the target tax burden from 11% to 16% of the retail selling price. This is according to a February 2025 press release, in which South Africa Wine submitted its response, highlighting concerns over the impact this would have on the wine sector.
“Wine grape producers have been facing immense cash-flow pressures, delaying much needed capital-intensive replacements, and placing future profitability and financial stability at risk,” said Yolandi Botha, agricultural economist at Vinpro, on the recent excise tax increase. “An increase in excise tax will curb wine grape prices at farm gate and only escalate the problem at hand.” PHOTO: Hannah Abrahams
“[Excise tax on wine is] a government-imposed tax on alcohol production or sale,” said Wanda Augustyn, communications and brand manager at South Africa Wine. “It’s usually charged per litre, meant to regulate alcohol consumption and generate revenue, […] is separate from VAT, and often included in the final price for a bottle of wine.”
Consequences for the wine industry
An excise tax increase influences entire rural communities and raises national unemployment, said Botha.
The proposed tax increase will also directly impact consumer behaviour, according to Emile Langenhoven, general manager at Lanzerac Wine Estate in Stellenbosch.
“Wine as a product is already under pressure in the local market, and these increases will put even more strain on sales, directly affecting the bottom line of wineries,” said Langenhoven, in correspondence with SMF News.
Vineyards at Klein Goederust, a boutique winery in Franschhoek. PHOTO: Hannah Abrahams
Worsened impact for smaller-scale wineries
“[Proposed tax increases] will hurt smaller producers like us even more, as we have very tight margins,” said Rodney Zimba, winemaker and farm manager at Klein Goederust, a boutique winery in Franschhoek.
This exacerbates pressures experienced by wine farmers, including “inflation, input costs, wage increases, and climate change”, said Zimba. “We are still recovering from alcohol bans of Covid-19 and are competing with international prices.”
Smaller wine producers, such as boutique winery Klein Goederust in Franschhoek, will be impacted by the proposed excise tax increase even more, according to Rodney Zimba, the winery’s winemaker and farm manager. PHOTO: Hannah Abrahams