PATRICIA PILLAY: Excise relief will be critical to ensure the survival of our local beer industry

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Beer industry of SA asks the finance minister for excise relief for the devastated industry and to help job-creating SMMEs

Just three years ago the craft brewing scene in SA was exploding, having grown from 50 craft breweries in 2015 to just over 200 by 2019. These breweries employ between two and 100 people, depending on their size, with the smaller ones employing about 10 people on average.

One of the main reasons for these closures is that little financial relief has been provided by the government to businesses in our industry. If we hope to save this once thriving sector from complete collapse while ensuring the future sustainability of the entire beer value chain and the more than 450,000 jobs it supports, we need enabling government policies to encourage the recovery of our industry.

One of the main functions of excise duties is to discourage the consumption of harmful products. Basa members have already started work to promote moderate drinking and position beer as the drink of moderation. We believe beer is ideally placed for this because of its relatively low alcohol content by volume.

It is common practice in many other countries to regulate alcohol beverages based on the beverage type and alcohol strength. For example, in many Organisation for Economic Co-operation and Development countries spirits are taxed higher than beer in terms of the excise per litre of pure alcohol, including Australia, Canada, Denmark, Finland, France, Iceland, Ireland, Israel, Mexico, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland and the UK.

Finally, in the current tax legislation, small, medium & micro enterprises such as craft brewers are not sufficiently recognised or provided with relief in relation to excise duties to encourage growth and job creation in this sector. This is of concern as craft brewers form an integral facet of our local beer industry and culture. In SA craft brewers are supported by large corporates since their product offering is not in direct competition.

 

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