South Africa’s 2026 Budget delivered exactly what the alcohol industry lobbied for – alcohol tax increases of just 3.4%.
In the weeks before the budget, Diageo deployed alarming projections and illicit trade warnings; after the announcement, Heineken, Wine South Africa, and the National Liquor Traders publicly celebrated the outcome – while media headlines framed it as “good news” ignoring South Africa’s heavy alcohol burden.

“2026 Budget: Sin Tax Could Make Alcohol Unaffordable and Boost the Illicit Trade”

The Citizen reports:

“Sibani Mngadi, corporate relations director at Diageo South Africa, said the tax on spirits has practically doubled from R52 per bottle in 2016 to, most likely, over R100 with the presentation of the 2026 Budget Statement. This includes 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 Mngadi.

“He said Diageo has called for a halt on the excise tax increase for spirits products, while the excise tax policy is still under review.

“‘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,’ he said.

“Spirits are, by far, the most smuggled and counterfeited category of alcohol. Illicit trade in spirits costs the government R11 billion in tax revenue every year, according to a 2025 Euromonitor study.”

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“Budget 2026 | Alcohol Industry Approves of Inflation-Linked Sin Tax Increases”

IOL reports:

“Alcohol producers have welcomed the decision to limit sin tax increases to inflation, saying predictable adjustments are critical for industry stability and efforts to curb illicit trade.

“Millicent Maroga, corporate affairs director at Heineken Beverages, said inflation-linked increases promote fairness, stability, and long-term sustainability across alcohol categories.

“Maroga said keeping excise adjustments predictable helps narrow the price gap between legal and illicit products, strengthening enforcement and compliance efforts.

“Heineken also welcomed the announcement of the National Illicit Economy Disruption Programme, saying the company looks forward to partnering with the government.”

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Other Articles on Same Topic

  • Budget Speech 2026: Inflation-Linked Alcohol Duty Plan Cheered (The South African)
  • South African Government’s Wine Duty Increase “Vital”, Says Wine South Africa (Winetitles)
  • Good News About Alcohol and Cigarette Prices in South Africa (Daily Investor)
  • FIRST TAKE | Budget Speech: Cigarettes, Beer Up in Line With Inflation (The South African)
  • Price Hikes for Alcohol and Tobacco in South Africa Incoming (BusinessTech)
  • R100 Tax Per Bottle? Spirits Industry Sounds Alarm Ahead of Budget (The South African)
  • How SA’s Sugar and Alcohol Taxes Affect Your Wallet and Health (IOL)
  • Here’s Why Making Alcohol More Expensive Won’t Stop People From Drinking It (The Citizen)

Assessment

This outcome is a direct result of the sustained lobbying campaign documented in the Movendi Media Snapshot from December 2025.

  • Diageo, the world’s largest liquor producer, led the pre-budget lobbying push through its South African corporate relations director Sibani Mngadi.
  • Heineken Beverages, the world’s second largest beer producer, through corporate affairs director Millicent Maroga, immediately welcomed the outcome.
  • Wine South Africa and the National Liquor Traders – both alcohol industry bodies – echoed the same messaging.

That competing multinational corporations coordinated the same public response points to a shared strategic objective: keeping alcohol taxes as low as possible.

The pre-budget lobbying and interference phase followed a well-documented playbook: Diageo projected that excise tax on spirits could reach R100 per bottle and warned this would push consumers into illicit markets – citing a Euromonitor study estimating illicit alcohol at 18% of the market and costing R11 billion in lost revenue. This is the same Euromonitor-based narrative that the alcohol industry lobby group BASA deployed during the 2025 public consultation process, and that Movendi has documented as a long-standing industry tactic used globally to discourage governments from raising alcohol taxes. The fear-mongering set the terms of the public debate and gave political cover for the government to limit the alcohol tax increases to only inflation.

The post-budget alcohol industry reaction confirmed the strategy worked.

  • Heineken praised the increases as promoting “fairness, stability, and long-term sustainability” and expressed interest in “partnering with the government” through the new National Illicit Economy Disruption Programme.
  • Wine South Africa’s CEO Rico Basson called the inflation-linked adjustment “vital” for the sector, while the organisation added that “meaningful and lasting solutions do not lie solely in further regulatory or excise interventions” – calling instead for “collective societal responsibility.”

This framing deflects from evidence-based policy by shifting responsibility away from the product and onto individuals and society. Media coverage reinforced this, with headlines declaring “good news” about alcohol prices.

But independent evidence contradicts the alcohol industry position. The WHO has consistently identified alcohol taxation as the most effective and cost-effective alcohol policy best buys to prevent and reduce alcohol harm. Peer-reviewed research shows that higher alcohol taxes, combined with targeted enforcement, reduce both recorded and unrecorded alcohol use – and that the claimed link between tax increases and illicit trade is routinely overstated by alcohol industry actors. In South Africa specifically, analysis by the University of Cape Town’s Research Unit on the Economics of Excisable Products has shown that alcohol tax revenue has continued to increase despite repeated excise increases, contradicting the industry narrative.

For alcohol policy advocates, this budget outcome underscores the urgency of building counter-narratives before the next fiscal cycle. And it is key to hold the media accountable and to engage journalists to build capacity for accurate reporting on alcohol harm and policy topics.

The alcohol industry’s illicit trade claims dominated media coverage and policy debate. Advocates have an opportunity to use this case to expose how the alcohol industry’s lobbying arc operates – alarm, concession, celebration – and to make the evidence-based case for above-inflation excise increases and a structural reform alcohol taxation in South Africa, as part of a modern and evidence-based alcohol policy system in South Africa.