Spirits producer Diageo South Africa has warned that any further increases in taxes on these alcoholic drinks would likely only strengthen organised crime networks in the country.

For years now, the excise on spirits has been increased at every annual budget by 6% (or more). If the Finance Minister did the same in his 2026/27 budget, to be released next week, it would take the excise on a 750 ml bottle of spirits (brandy, gin, rum, vodka and whisky) to more than R100. In 2016, the excise levied had been R52.

“At R100 per bottle, government tax becomes the biggest component of the cost to the consumer, ranging between 55% to 65% of the retail selling price of mainstream spirits products,” pointed out Diageo South Africa corporate relations director Sibani Mngadi. “We believe there is no room for consumers to absorb further increases in the statutory component of the price.”

Criminals were already able to offer illicit (smuggled or counterfeit) spirits at less than half of legitimate market prices. Spirits were, far and away, the most smuggled and counterfeited alcoholic products. The illegal trade had grown exponentially and now accounted for 18% of the total alcohol market, highlighted Diageo. According to a Euromonitor study carried out last year, this illegal trade meant that the government was losing R11-billion in tax revenues each year.

The company has called for a freeze on increases in the excise imposed on spirits in the next budget, pointing out that National Treasury was currently reviewing its excise tax policy. The Treasury had acknowledged that spirits were taxed more heavily than other categories of alcohol.

Under the 2025/26 Budget Statement, spirits were taxed at a rate of R292.21 per litre of absolute alcohol, compared with R145.07 per litre of absolute alcohol for beer and cider, and a mere R5.95 per litre of finished product (irrespective of alcohol-by-volume level) for wine.

“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,” argued Mngadi. The company sought an evidence-based and fair excise policy that supported the legitimate market and responsible drinking, undermined the illicit market, and thereby protected government revenues.