SAB encouraged by excise decision
The South African Breweries (SAB) notes the Minister of Finance and National Treasury’s decision to adjust the annual excise for beer at slightly above inflation. The 2021 excise adjustment was almost double the rate of inflation and we believe that this year’s adjustment is an acknowledgement of the adverse effects caused by the pandemic, much of which severely disrupted the operations of the beer value chain and destroyed 30% of small, medium and micro-breweries in the industry.
“We are encouraged by the positioning of the Budget that has prioritized economic recovery by way of keeping the beer excise adjustment closer to inflation. This will provide some support to the 250 000 livelihoods in the beer value chain; which comprise of farmers, taverners, transporters, marketers, packaging companies, manufacturers and retailers” commented SAB CEO, Richard Rivett-Carnac.
“The excise adjustment for wine, cider, beer and spirits has been differentiated by the National Treasury. This serves as recognition that the annual excise adjustment should not be applied uniformly and should be differentiated across alcohol categories. SAB notes, however, that unfortified wine has received the lowest excise tax increase (4.5%) exacerbating the already favourable excise tax rate that wine receives when compared with other categories. We do not understand this decision and look forward to the review of the excise policy that will allow us to re-examine the significant differences in the tax incidence rates among categories” said Rivett-Carnac.
Rivett-Carnac further commented that the excise adjustment will allow SAB to plan for greater capital investment in South Africa, given the closer alignment between the excise adjustment and the excise policy. “Tax policy guidelines that are closely adhered to by the government encourage investment and economic growth. They create a business enabling environment for the private sector by reducing the uncertainty around future tax obligations for companies with strong job and economic multipliers, like the beer industry. SAB prides itself in having a value chain that is more than 95% localized. We are optimistic about the future of South Africa and its economic prospects. South Africa is still a suitable destination for our capital investments so long as the macro environment is conducive for business”, concluded Rivett-Carnac.
