The South African wine industry welcomed a concession from Government on the latest excise duty increases, saying it revealed a greater insight into the unique challenges facing this industry.
Excise hikes of 6.2% on unfortified wine, 10% on sparkling wine and 12% on brandy were announced by the Minister of Finance, Pravin Gordhan, during the annual National Budget Speech on 26 February 2014.
According to Rico Basson, managing director of VinPro – the representative organisation for close to 3,600 wine producers and cellars – the increase in excise duty on wine was the lowest in years, which indicated that Treasury responded to an appeal by the industry.
The 12% hike in brandy will, however, increase pressure on the sales volumes of this important wine industry segment even further, of which more than 50% of the retail price is already paid to excise and VAT.
“The wine industry plays an important part in job creation, growth and the generation of foreign exchange. We therefore support the strong focus by the Minister on the elements of the National Development Plan, with specific reference to the importance of the private sector’s contribution to economic growth,” said Basson.
There is, however, some concern by die industry about the extent of illicit trade and the socio economic impact of abuse. The wine industry therefore called on Government for a responsible policy framework with focused actions, and committed itself to closer collaboration in this regard.