South Africa’s 2026 Budget set alcohol excise at a 3.4% increase – a clear retreat from last year’s above-inflation adjustment and a result that matches the alcohol industry’s central demand: keep tax increases to a minimum so alcohol stays affordable. That outcome did not happen by accident. It followed a sustained alcohol industry campaign built on unverifiable job claims, illicit trade scare stories, and industry-funded “evidence” designed to narrow the policy debate and block more ambitious alcohol taxation.
In May 2025, National Treasury raised excise duties on alcoholic beverages by 6.75% – more than double the prevailing inflation rate of 2.8% – demonstrating that above-inflation adjustments were politically possible. In November 2024, Treasury published its discussion paper on the taxation of alcoholic beverages, proposing progressive, tiered excise structures that would tax higher-alcohol products at higher rates. This direction aligns with the World Health Organization’s identification of alcohol taxation as a Best Buy intervention – the most cost-effective tool governments can use to prevent and reduce alcohol harm.
Then the industry mobilised. By the time Godongwana delivered the 2026 Budget Speech on 25 February, the increase had been cut in half compared to the year before: a 3.4% rise, locked to inflation, with no structural reform to the excise framework. A 340ml can of beer went up by just 8 cents. A bottle of wine by 15 cents.
The Playbook: Threats, Front Groups, and Funded Research
The campaign to derail above-inflation excise increases started months before the budget reading.
The Beer Association of South Africa (BASA), a front group representing transnational giants AB InBev and Heineken, led the charge. In November 2025, BASA CEO Charlene Louw warned that high taxes were fuelling the illicit alcohol trade, citing a Euromonitor study claiming illegal alcohol accounts for 18% of the market and costs the government R16.1 billion in lost tax revenue. Louw urged the government to adopt inflation-linked tax adjustments only, arguing this would “stabilise the formal industry, protect existing jobs, and discourage consumers from turning to the cheaper, but dangerous, illicit market.”
Fatsani Banda, SAB’s Senior Manager for Excise Tax and Public Policy, has been one of the industry’s most visible voice in South African tax debates for years. In opinion pieces, media appearances, and industry forums, Banda has consistently argued that above-inflation excise increases make it difficult for SAB to remain competitive and threatened that the company would consider investing in other African countries instead. At a 2024 “Beer Tax Indaba” at the Johannesburg Stock Exchange, SAB presented an Oxford Economics report – commissioned by the industry itself – arguing that above-inflation excise increases had pushed beer tax burdens above government targets. The report’s recommendation: an automated CPI-linked mechanism.
The Illicit Trade SCARE
The cornerstone of the industry’s lobbying was an ofter-repeated claim: that higher excise taxes drive consumers to illicit products. This argument deserves scrutiny.
The industry cited a 2025 Euromonitor International study estimating that illicit alcohol accounts for 18% of the market and costs R11–16 billion in lost tax revenue. But Euromonitor’s research on illicit alcohol is actually commissioned and funded by the alcohol industry, and previous Euromonitor estimates on illicit tobacco trade have been challenged by independent researchers globally for overestimating the scale of illicit markets in ways that serve industry lobbying objectives. University of Cape Town researchers have noted that alcohol revenue data show no evidence of a significant or growing illicit trade problem, despite vocal industry claims.
The World Health Organization’s position is clear: effective excise policy can be implemented without any substantial increases in illicit or unrecorded alcohol. As the Southern African Alcohol Policy Alliance (SAAPA) pointed out in response to the budget, weakening alcohol taxation in response to illicit trade undermines both public health and revenue potential. The illicit trade argument is a deflection. It asks governments to set tax policy around the behaviour of criminals rather than the needs of public health – and it has been used by the alcohol industry in virtually every country where meaningful tax reform is proposed.
What Communities Demanded – and What They Got
One week before the budget, on 18 February, hundreds of people from Gugulethu, Khayelitsha, Manenberg, and Mitchell’s Plain marched to Parliament in Cape Town demanding higher alcohol taxes. The march, organised by SAAPA under its True Cost of Alcohol campaign, brought together community health workers, neighbourhood watch members, and community policing forum representatives – people living daily with the consequences of alcohol harm.
SAAPA’s Odwa Nakani told GroundUp: “The situation in our communities is dire. We have unlicensed shebeens all over the place. Sometimes you’ll find that one street has five shebeens. Some of these shebeens are located next to schools and churches.” Campaign manager Nomcebo Dlamini pointed out that beer costs less than a loaf of bread in most South African communities – a fact that makes alcohol one of the most accessible and most harmful products on the market.
The harm fuelling this anger is not abstract. According to the WHO, 100 South Africans die every day from alcohol-related causes – roughly 37,000 preventable deaths each year. Research from the South African Medical Research Council and the University of Cape Town estimates that alcohol harm costs South Africa between 10% and 12% of GDP annually, appearing in overcrowded trauma units, gender-based violence, road traffic injuries, and fetal alcohol spectrum disorders. SAAPA’s secretary general Aadielah Maker Diedericks noted that one in three South African women reports gender-based violence, and 60% of those cases involve a partner who used alcohol. Approximately 58% of road fatalities are linked to alcohol use.
These communities were not alone in their call. A July 2025 survey by Vital Strategies found that 96% of South Africans view alcohol use as a national problem, with 77% calling it a major one. 85% supported higher alcohol taxes if the revenue funds social programmes. And 76% said alcohol companies should be held accountable for the harm their products cause. The public mandate for ambitious taxation could not have been clearer.
The government heard the industry. It chose not to hear the communities.
Who Celebrated – and What That Tells Us
The clearest measure of who won the 2026 Budget is who celebrated it. BASA “warmly welcomed” the outcome and praised the government’s “balanced and pragmatic policy stance.” Heineken’s corporate affairs director called inflation-linked increases a reflection of “fairness, stability, and long-term sustainability.” Diageo noted with satisfaction that excise on spirits would remain below the R100 threshold at R97.66 per bottle. The National Liquor Traders Council said the decision “strengthens the position of lawful traders.”
When the alcohol industry celebrates a tax decision, public health has lost. South Africa’s 2026 Budget is a case study in how corporate lobbying, front groups, and the weaponisation of the illicit trade narrative can override both the evidence on alcohol harm and the demands of the communities that bear its cost.
Sources:
Matzopoulos RG, Truen S, Bowman B, et al. The cost of harmful alcohol use in South Africa. South African Medical Journal. 2014;104(2):127–132. DOI: 10.7196/SAMJ.7644
Vital Strategies. Public Attitudes Towards Alcohol Policy: South Africa. July 2025.
World Health Organization. Tackling NCDs: Best Buys and Other Recommended Interventions for the Prevention and Control of Noncommunicable Diseases. Geneva: WHO, 2017.
National Treasury, South Africa. The Taxation of Alcoholic Beverages: Discussion Paper. November 2024.
Oxford Economics Africa. Double the Pain: The Burden of Unpredictable Excise Taxes and High Inflation on Beer in South Africa. Commissioned by SAB, 2024.
Van Walbeek C, Chelwa G, et al. How alcohol excise tax can reduce harm. Polity.org.za, 10 February 2026.