According to VinPro MD, Rico Basson, the above-inflation excise tax increase was extremely disappointing.
South Africa’s grape producers had been under financial pressure for some time due to the prevailing drought and other economic challenges.
“Production costs have doubled in the past decade and costs are expected to rise 9% in 2018, along with a 17% increase in the minimum wage, which takes effect on 1 May,” Basson said.
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He added that the average wine grape producer did not operate at sustainable profit margins and more than a third were running at a loss, which was a great concern as the wine industry supported about 290 000 jobs.
“In addition, a much smaller crop is expected this year as a result of the drought, which will not only have a significant economic impact, but will also lead to social welfare challenges due to job losses.”
Agri SA president, Dan Kriek, also expressed the organisation’s discontent with the increase in excise tax.
“Given the fact that the sector is presently facing serious cost pressures because of the prevailing drought, especially in the Western Cape, our view is that the increased excise duties on alcohol might have an adverse impact on the wine industry and could possibly lead to job losses. Some relief in this regard would have been acutely welcomed,” he said in a statement.
