Wine, brandy excise hikes hard for industry to absorb

THE South African wine industry understands the government’s economic challenges. However, the aboveinflation hikes in wine and brandy excise will be challenging for producers and cellars to absorb.

Excise hikes of 8.8% on wine and sparkling wine and 8.5% on spirits were announced by the Minister of Finance Pravin Gordhan during the annual National Budget Speech yesterday.

“In a depressed economy where wine retail price increases are below inflation, wine producers and cellars will find it difficult to absorb these increases,” said Rico Basson, managing director of VinPro, the representative organisation for close to 3 500 South African wine producers and cellars.

Only a third of grape producers are operating at financially sustainable levels and return on investment has dropped below 2%.

The industry comprises 97 000 hectares under wine grapes and employs close to 300 000 people.

“Investment, policy certainty and direct support with regard to agriculturerelated aspects such as housing, water, land and market access will be critical to take the industry forward,” said Basson.

The industry remains concerned at the extent of illicit trade and the socio-economic impact of alcohol abuse, and calls on the government for a responsible policy framework with joint, direct interventions.

Loots is manager of internal and corporate communications at VinPro