CAPE TOWN - An excise tax increase of 8.5% for wine, including sparkling wine and brandy announced by the Finance Minister Malusi Gigaba during the annual National Budget Speech on Wednesday was very disappointing for the industry, say industry body Vinpro.
Gigaba also announced an increase of 6% on fortified wine.
Rico Basson, managing director of Vinpro said, "The above inflation excise tax is extremely disappointing especially given the fact that the industry reached, and even exceeded the tax incidence targets agreed upon in 2014".
A statement issued on behalf of Agri SA said, "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 possible lead to job losses. Some relief in this regard would have been acutely welcomed".
The South African wine industry is bracing itself for the smallest harvest in more than a decade as the drought and water shortages in the Western Cape threatens farms and wineries that employ thousands of seasonal workers.
Wessel Lemmer, senior agricultural economist at Absa AgriBusiness said, "The R6 billion for drought relief and public infrastructure investment, as well as measurements to address the needs of drought affected communities, are welcomed interventions as these will provide much-needed relief to affected producers and communities".
Gigaba said that an estimated R581,7 million would be reprioritised by the Department of Agriculture, Forestry and Fisheries (DAFF) from the Comprehensive Agricultural Support Programme grant for the black producer commercialisation programme, which would aim to create and support 450 sustainable and profitable black commercial producers over a five-year period.
According to Wines of South Africa, in regards to global wine production, SA ranks seventh in overall volume production of wine, producing 3.9% of the world's wine.