Government tax on spirits is expected to pass the significant R100 per 750ml bottle mark, should the Minister of Finance, Enoch Godongwana, apply the usual 6%-plus annual increase in excise during the Budget Speech next week.
750ml is the main unit size offering to the market for all subcategories of spirits – brandy, gin, vodka, whisky and rum.
“At R100 per bottle, government tax becomes the biggest component of the cost to the consumer, ranging between 55-65% of the retail selling price of mainstream spirits products. We believe there is no room for consumers to absorb further increases in the statutory component of the price,” said Sibani Mngadi, Corporate Relations Director at Diageo South Africa.
Tax on spirits have practically doubled from R52 per bottle in 2016 to most likely over R100 with the presentation of the 2026 Budget Statement.
Tax-evading illicit traders turn this large tax burden to the benefit of their own criminal networks, offering smuggled and counterfeited spirits at less than 50% of market prices. The large tax increases on spirits over many years have directly facilitated the exponential growth of illicit trade, which now stands at 18% of the alcohol market.
Spirits is, by far, the most smuggled and counterfeited category of alcohol. Illicit trade in spirits causes an R11 billion loss in tax revenue for the government every single year, according to a 2025 Euromonitor study.
Diageo South Africa, the country’s leading spirits company, has called for a freeze on excise tax increases for spirits products, while the excise tax policy is still under review. In its policy review document on the Taxation of Alcoholic Beverages, Treasury itself acknowledges that spirits is taxed much more heavily than other categories. The Treasury review document concluded:
“For now, no further adjustments [of excise tax] are proposed for consideration for the spirit category.”
Mngadi argued that: “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.”
Diageo South Africa is committed to engagement with government and industry partners to develop a fair, evidence‑based excise regime that supports responsible consumption while curbing illicit trade and protecting government revenue.