The head of SA Breweries (SAB), Africa’s largest beer producer, has warned that the Treasury’s proposal to set a price floor below which alcohol cannot be sold will punish the poor and turbocharge the black market, harming both the industry and public safety.
“We are engaging with the Treasury on that policy review, and the discussions we’re having are around the reality of the market today,” said Richard Rivett-Carnac, who heads SAB, which was swallowed by AB InBev in one of the biggest M&A deals in history about a decade ago.
“Any pricing tool that significantly increases alcohol costs risks pushing constrained consumers further towards illicit options. That’s bad for jobs, bad for tax revenue and bad for public health. It’s all interconnected and that’s the message we’re communicating to the government.
Rivett-Carnac’s comments are likely to draw sharp criticism from civic organisations and public health advocates such DG Murray Trust, who see the alcohol pricing, alongside other levies, as a vital lever to rein in what the World Health Organisation (WHO) calls one of the heaviest drinking populations in the world.
Nearly 60% of South Africans engage in binge drinking, and the societal costs of alcohol abuse are staggeringly high. A WHO study found that harmful alcohol use results in more than 3-million deaths globally per year, and contributes to 200-plus diseases and injuries.
The Treasury, backed by health activists, argued in a policy proposal issued late last year that alcohol taxes and pricing polices should help internalise these external economic costs.
Still, the policy risked pushing more consumers into the shadows. A study commissioned by SAB in recent months showed the illicit alcohol trade had risen by a staggering 55% since 2017 to nearly 800,000 hectolitres of pure alcohol, or about one in every five alcoholic drinks sold.
Illicit trade
Rivett-Carnac also warned that steep above-inflation increases in excise duty, or sin tax, were accelerating the shift towards illicit trade and undermining the formal sector’s ability to contribute to jobs, health and revenue.
“We’ve been very clear on our stance. We’ve engaged publicly, across the government and broader society, advocating that excise increases be aligned with inflation. That’s our policy position. The challenge is that year after year, above-inflation hikes have a compounding effect — and we’re now seeing a significant rise in the illicit alcohol market,” he said.
“ Drinks Federation SA recently published a report estimating that one in five alcoholic beverages consumed in SA is illicit. That’s a R25bn industry in terms of sales, costing the country about R15bn in lost tax revenue. It’s a serious issue, not just for public health, but also for economic growth.
“The excise tax applies to legal businesses like ours. If we’re not growing, you’re not adding agricultural jobs, manufacturing jobs, or transport jobs. Meanwhile, illicit products — often dangerously unregulated — continue to flood the market and harm consumers,” Rivett-Carnac said.
Last week, AB InBev issued a quarterly earnings report, which showed that its core, lower-priced brands such as Castle Lager and Black Label registered declines in volume sold. It said that was possibly a sign that price-sensitive trade fell further to illicit products that evaded taxes and undercut formal prices.
“We acknowledge the critical role of excise tax — not just in revenue collection but also in mitigating alcohol-related harm. However, I’d emphasise the urgent need for better co-ordination between the government and industry on how to tackle illicit trade effectively,” Rivett-Carnac said.
“Because if we don’t, we risk replicating what happened in the cigarette market, where 60%-70% is now illicit.”
UPDATE, August 11, 2025
*Correction: This article was amended to make clear that it is Drinks Federation SA, an industry lobby group, that published a report on the illicit alcohol market.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.