Claims that South Africa’s illicit alcohol market grew by 55% between 2017 and 2024 have come under scrutiny as the government reviews the country’s alcohol taxation framework.
The claim was challenged at a media roundtable hosted by the Southern African Alcohol Policy Alliance in South Africa (SAAPA SA) in Johannesburg this week, where experts questioned whether the evidence behind the widely cited figure actually demonstrates the size or growth of the illicit alcohol market.
The discussion, titled The Truth About Illicit Alcohol Trade, comes as National Treasury undertakes a review of South Africa’s alcohol taxation framework.
The argument matters because excise taxation is not simply a source of government revenue. It is also intended to influence alcohol consumption and account for some of the wider social and economic costs associated with harmful drinking.
SAAPA SA has called for the review to look beyond revenue collection and concerns raised by the alcohol industry, arguing that taxation is an important public-health tool that can help reduce harmful consumption and its wider social and economic costs.
Corné van Walbeek, director of the Research Unit on the Economics of Excisable Products (REEP), examined the evidence behind claims that illicit alcohol sales increased by 55% between 2017 and 2024.
The figure is frequently linked to a 2025 Euromonitor report commissioned by the Drinks Association of South Africa.
Van Walbeek said the report drew on legal alcohol sales data, secondary sources, product information collected from 57 outlets across several provinces, interviews with 12 stakeholders and an online survey involving 707 consumers.
However, he argued that these sources do not establish either the size of the illicit alcohol market or the rate at which it has grown.
“The illicit alcohol market is a real concern, and it must be taken seriously. But serious policy decisions require serious evidence. We cannot use a number simply because it is widely repeated when the research behind it does not actually establish that number,” Van Walbeek said.
He said questioning the 55% figure does not mean that illicit alcohol is not a significant concern.
Instead, he said claims about the size and growth of the market need to be supported by credible evidence.
Van Walbeek also pointed to lessons from tobacco control, advocating targeted measures such as effective Track and Trace systems to tackle illicit trade.
What Treasury is weighing
Mpho Legote, director of VAT, Excise Duties and Sub National Taxes at National Treasury, provided insight into the government’s approach to alcohol excise taxation.
Legote explained that alcohol consumption is one of the leading risk factors for population health globally and creates substantial social and economic costs.
These costs are not fully reflected in the price consumers pay for alcohol, creating what economists describe as externalities and internalities.
Alcohol taxation and pricing policies can therefore be used both to account for some of these costs and to influence harmful consumption.
South Africa’s excise framework is based on benchmarks introduced in 2002 and revised in 2012.
In 2015, VAT was removed from the calculation of the tax burden so that the focus could be placed specifically on excise duties. The excise burden was subsequently set at 11% for wine, 23% for beer and 36% for spirits.
The treatment of ciders and alcoholic fruit beverages has also changed over time, with the basis for calculating duties moving towards absolute alcohol content.
The policy discussion highlights that alcohol excise taxation is not simply about raising revenue, but also forms part of the government’s response to the health and socioeconomic consequences of alcohol consumption.
The cost of alcohol
The economic contribution of the alcohol industry was also weighed against the wider cost of alcohol-related harm.
Kashifa Ancer, campaign manager for Rethink Your Drink, an alcohol harm-reduction campaign by the DG Murray Trust, said the alcohol industry contributes an estimated R226 billion to the South African economy.
The estimated cost of alcohol-related harm, however, is approximately R800bn.
Ancer illustrated the scale of the figure by noting that R800bn could fund roughly four million RDP homes or more than 125 million Child Support Grants for a year.
She also noted that the estimated cost of alcohol-related harm is greater than South Africa’s entire national health budget.
The burden is also unevenly distributed, with people in lower-income groups approximately 4.5 times more likely to die from alcohol-related causes.
Ancer argued that the existence of an illicit alcohol market should not be used to dismiss the potential role of pricing policies in reducing harmful consumption.
Nomcebo Dlamini, campaign director of the True Cost of Alcohol Campaign at SAAPA SA, said the debate around illicit alcohol needs to be considered alongside the broader consequences of alcohol consumption.
“We need to have an honest conversation about illicit alcohol, but that conversation must be grounded in evidence rather than claims that are repeated until they become accepted as fact. The existence of an illicit market should not become a convenient argument for weakening policies that are proven to reduce alcohol consumption and protect communities,” Dlamini said.
The debate comes at a significant point for South Africa’s alcohol industry, with National Treasury considering changes to the country’s alcohol tax framework.
SAAPA SA said the roundtable was intended to encourage a more evidence-based discussion about the relationship between alcohol taxation, illicit trade and harm reduction.
The central issue is likely to remain contested as policymakers balance government revenue, the sustainability of the formal alcohol industry, the threat posed by illicit markets and the substantial social and economic costs associated with harmful alcohol consumption.
ashley.lechman@nationalmg.co.za