South Africa’s excise duty on spirits is expected to exceed R100 for a 750ml bottle if Finance Minister Enoch Godongwana enacts the anticipated increase of over 6% in this week’s 2026 Budget Speech.
Industry analysts note that such a rise would make government tax the largest single component of a bottle’s retail price, representing between 55% and 65% of the total cost for mainstream spirits.
Sharp Increase Over the Past Decade
Excise duties on spirits have climbed significantly over the past ten years, nearly doubling from R52 per 750ml bottle in 2016 to a projected R100-plus in 2026. Currently, spirits carry a tax of R292.91 per litre of absolute alcohol (LAA), more than twice the R145.07 per LAA applied to beer and cider. Wine is taxed far less, at R5.95 per litre of finished product, regardless of alcohol content.
Industry representatives argue that if the goal of excise duty is to moderate alcohol consumption, it should be applied consistently across all alcoholic beverages based on their absolute alcohol content. At the projected level, taxes alone would dominate the cost of a bottle, leaving limited scope for further increases without burdening consumers.
Concerns About Illicit Trade
Rising taxes are also linked to growth in the illicit alcohol market, which is estimated to account for 18% of total alcohol sales in South Africa. Spirits are among the most frequently smuggled and counterfeited products, often sold at less than half the price of legitimate goods.
A 2025 study by Euromonitor International estimates that illicit alcohol costs the government R11 billion annually in lost tax revenue. Industry experts warn that further excise hikes could push more consumers toward unregulated alternatives, undermining both public health objectives and tax collection.
If implemented, the upcoming increase would push the excise tax on a standard bottle of spirits past a symbolic and financially significant milestone, reinforcing its status as a major factor in retail pricing.
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