SAB Warns R25bn Illicit Alcohol Market Threatens Jobs

South African Breweries (SAB) has sounded the alarm over what it says is a rapidly expanding illicit alcohol market, now worth R25.1billion, warning that repeated above-inflation excise increases are pushing consumers toward illegal alternatives and eroding the formal industry.

Richard Rivett-Carnac, the CEO of SAB (which is owned by AB InBev, the largest brewing company in the world), said on Thursday that while the company accepts the need for alcohol taxes to address harm, the current trajectory is having unintended consequences. Historically, excise has risen about two percentage points above inflation each year, compounding the tax burden and widening the price gap between legal and illegal products. Illicit alcohol can sell for roughly half the price because producers do not pay excise duty or VAT.

According to a research firm, Euromonitor, the South African illicit alcohol market grew 55% in volume between 2017 and 2024. It calculates that government lost R16.5 billion in tax revenue last year alone, while SAB says it forfeited just more than R25 billion in revenue. Almost one in five drinks sold in South Africa is believed to be illegal, and 67% of consumers surveyed said they would knowingly buy illicit alcohol because it is cheaper.

Industry representatives also raised public health concerns, citing testing conducted by the University of KwaZulu-Natal that reportedly found dangerous substances including methanol in illegal products. SAB has pointed to the cigarette sector as a warning, where illicit trade is estimated at 60% to 75% of total sales, contributing to plant closures and job losses.

Rivett-Carnac said the alcohol industry wants to avoid a similar outcome, arguing that excise policy must balance revenue, harm reduction, and the sustainability of legitimate trade.