Aggregate consumption of tax-paid alcohol in South Africa increased by 24.2% between 2017 and 2024, according to a University of Cape Town analysis released in August 2026. The figures challenge industry claims about a surging illicit market as the National Treasury considers higher excise taxes on alcoholic beverages.
South Africans became poorer between 2017 and 2024, yet consumption of tax-paid alcohol increased. That central finding anchors a new study presented by Corné van Walbeek, director of UCT’s Research Unit on the Economics of Excisable Products.
While aggregate tax-paid alcohol consumption rose by 24.2% over the seven-year period, the population aged 15 and older grew by 14.7%. Factoring in that demographic shift, Van Walbeek calculated that per-capita consumption of tax-paid alcohol increased by 8.3%.
Economic Pressures Versus Rising Tax-Paid Sales
The increase in legal alcohol sales unfolded against a backdrop of declining household wealth. Van Walbeek’s analysis shows that per-capita gross domestic product dropped by 4.7% over the same timeframe, while household disposable income per capita fell by 1.5%.
During this same period, real alcohol excise taxes increased by between 10% and 13%, while the real price of alcohol remained roughly constant, according to the university analysis. A June 2026 paper co-authored by Van Walbeek and Nicole Vellios analyzed National Treasury excise-revenue data and similarly concluded that per-capita legal alcohol consumption grew by about 10% after adjusting for population growth.
The Dispute Over the Illicit Alcohol Market
The new academic figures stand at the center of a brewing policy battle over the size and growth of the illicit alcohol trade. The alcohol industry has repeatedly argued that illicit sales are surging, warning that further excise tax hikes will only drive consumers deeper into the unregulated market.
The Drinks Federation of South Africa relies on a 2025 Euromonitor International report commissioned by the Drinks Association of South Africa. That research estimated that illicit alcohol volumes rose by 55% between 2017 and 2024, climbing from 498,290 hectolitres of pure alcohol to 773,424 hectolitres. By their figures, illicit products accounted for 18% of total alcohol volume sales in 2024, up from 15% in 2017.
A previous IOL investigation estimated the illicit alcohol market at R25.1 billion, with an estimated R16.5 billion in lost tax revenue in 2024. Meanwhile, the legal sector maintains that it supported around one in 31 jobs and generated more than R100 billion in tax revenue annually.
Van Walbeek challenged the industry’s 55% growth figure, arguing that the underlying Euromonitor research—which drew on legal data, secondary sources, information from 57 outlets, interviews with 12 industry stakeholders, and an online survey of 707 consumers—failed to substantiate the claimed market size or its expansion. He questioned how legal consumption could increase so substantially if illicit consumption was growing at an even faster rate, drawing a contrast with the cigarette market, where legal per-capita consumption fell by more than 60% between 2010 and 2024 as illicit products grew to more than 50% from 2020 onwards.
Treasury Submissions and the Debate Over Sin Taxes
The debate carries direct financial consequences as the National Treasury weighs adjustments to sin taxes. In July submissions, the Beer Association of South Africa warned that proposed policy changes could push excise taxes on most beers up by 20%.
South African Breweries has advocated linking annual alcohol excise increases to inflation. Zoleka Lisa, vice-president of corporate affairs at SAB, argued that an inflation-linked system would provide certainty for businesses and consumers while protecting government revenue and supporting investment and jobs.
Broader economic pressures affect the formal sector in other ways as well. Diageo, for example, is undergoing global restructuring and cost-cutting in response to weaker sales and changing consumption patterns.
Beyond fiscal revenue, public health advocates emphasize the social costs associated with consumption. Kashifa Ancer, campaign manager for Rethink Your Drink—an alcohol harm-reduction campaign by the DG Murray Trust—noted that while the legal alcohol industry contributes an estimated R226 billion to the economy, the estimated cost of alcohol-related harm reaches approximately R800 billion, a figure derived from a 2014 South African Medical Research Council policy brief. Ancer added that individuals in lower-income groups were approximately 4.5 times more likely to die from alcohol-related causes.
Mpho Legote, director of VAT, Excise Duties and Sub-National Taxes at the National Treasury, stated that alcohol consumption generates socioeconomic costs that are not fully reflected in the price paid by consumers, and that alcohol taxation and pricing policies were therefore intended to account for those costs while influencing harmful consumption.
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