South Africa’s legal beer market must remain competitive if the country is to effectively tackle illicit trade, the Beer Association of South Africa (BASA) has said, calling for an approach that balances fiscal objectives, enforcement priorities and the long term sustainability of the formal market.
The call comes as discussions on alcohol excise policy continue with National Treasury, with BASA arguing that the strength of the legal market should form part of the broader response to illicit trade.
South Africa’s beer industry supports approximately 210,000 direct and indirect jobs, contributes R96.5 billion to gross domestic product and generates about R67 billion in annual tax revenue.
“Protecting the legal beer market is not only about protecting brewers. It is about protecting the broader value chain of farmers, suppliers, distributors, retailers, taverns and hospitality businesses that rely on a strong and competitive formal market,” said Nirishi Trikamjee, Interim CEO of BASA.
The association said illicit trade remains a broader challenge facing South Africa’s alcohol sector and the economy, but argued that policy responses should consider both enforcement and the competitiveness of the formal market.
A strong legal beer market as a first line of defence
As South Africa’s largest formal alcohol category, beer plays a significant role in the regulated alcohol economy, providing consumers with an accessible, regulated and lower alcohol product choice.
BASA believes maintaining a strong and sustainable legal beer market is critical to keeping consumers within the formal economy while protecting jobs, supporting investment and sustaining tax revenues.
The association said stronger enforcement against illicit operators remains necessary, but that policy discussions should also take into account the conditions facing businesses and consumers within the legal market.
This includes the role of affordability, particularly as South African households continue to face pressure from inflation, unemployment and rising living costs.
Affordability remains a concern
BASA said affordability is an important factor in maintaining the strength of the formal market.
Research cited in the industry’s engagement with National Treasury found that 66% of surveyed consumers identified price as a critical factor in their purchasing decisions.
While there is limited publicly available evidence isolating the specific impact of excise increases on illicit beer, BASA believes policymakers should consider how affordability and price differences influence consumer behaviour.
The association warned that as the price gap between legal and illicit products widens, the incentive for consumers to seek cheaper alternatives could increase, potentially putting further pressure on the regulated market.
The concern comes as consumers contend with constrained disposable incomes and difficult household financial conditions.
For BASA, ensuring that legal products remain competitive therefore needs to be considered alongside efforts to combat illicit operators.
Tackling illicit trade requires a collective response
BASA said addressing illicit trade requires coordinated action between government, the South African Revenue Service, law enforcement agencies and industry.
The association supports stronger enforcement measures, including improved border controls, targeted action against illegal manufacturing, enhanced market intelligence and greater coordination between authorities.
At the same time, BASA believes maintaining a competitive, compliant and sustainable legal market should form part of the overall response.
The association said effective enforcement and responsible excise policy should work together to protect government revenue, support economic activity and limit opportunities for illicit operators.
BASA calls for an evidence led excise review
BASA supports an evidence led review of South Africa’s excise framework that takes into account fiscal objectives alongside wider economic and policy priorities.
The association believes protecting the legal beer market, strengthening enforcement and maintaining regulatory certainty are all important components of a sustainable response to illicit trade.
“A competitive legal beer market is not the problem to be solved. It is part of the solution,” said Trikamjee.
ashley.lechman@nationalmg.co.za