During the annual National Budget Speech on 22 February 2017, Minister of Finance, Pravin Gordhan, announced excise hikes of 8.8% on wine and sparkling wine and 8.5% on spirits. While the South African wine industry understands the government’s economic challenges, the above-inflation hikes in wine and brandy excise will be challenging for producers and cellars to absorb.
“In a depressed economy where wine retail price increases are below inflation, wine producers and cellars will find it difficult to absorb these increases,” said Rico Basson, managing director of VinPro, the representative organisation for close to 3,500 South African wine producers and cellars.
Only a third of grape producers are currently operating at financially sustainable levels and return on investment has dropped below 2%.
The industry comprises 97,000 ha under wine grapes and employs close to 300,000 people in total.
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