Clampdown on illicit liquor beverages

by | Dec 5, 2016 | News

alesThis was one of the key messages during the recent annual excise meeting at Treasury. It is estimated that the marginalised class, which cannot afford branded consumer goods, makes up almost 60% of the South African population. Affordability is therefore very important, to ensure that people do not consume alcoholic beverages in the illegal/illicit market (with negative health & fiscal effects).

The wine industry has a serious concern with sugar fermented products, as it is easily linked to wine. In fact the merchandising in the off-consumption trade (liquor stores) of these products are positioned next to wine – it looks like wine and are even displayed with grapes on the artwork.

In many cases it has been observed that the word ‘ale’ has also been dropped from the brand name; in some instances the A-number and/or physical address of the manufacturer is not even indicated; container sizes were also omitted.

The misleading of consumers is also noted, e.g. from one month to the other, the a/v has been adjusted from 10% to 8%, whilst the retail price stayed intact. The evading of excise is only one side of the coin, the other side is the detrimental impact it has across the wine value-chain and ultimately on the wine grape producer.

In the current financial year the excise for unfortified wine (High-, Medium- and Standard Price Wine, including Perlé) is R3.32 per litre, whilst spirits is sitting on R69.43 per litre.

The Excise Tax Policy is very clear that a fermented product that has more than 20% sugar as base material (sugar fermented product), can’t be classified as a cider or an alcoholic fruit beverage. Such fermented beverages is then earmarked to attract the same rate of excise duty as spirits.

With this in mind, the producer profitability, uprooting trend, wine exports to the value of almost R9 billion, the exceptional ability as a creator of economic growth and the labour/capital ratio that amounts to 4.64 (average of the economy sitting on 2.94), to name but a few, were put in context. But, without a step-up in law enforcement on illicit/illegal trade (with a dedicated focus on ales), the wine industry is in for a bumpy ride and can’t weather the storm of yet another extreme hike in excise duties – in sufficing the tax incidence targets on wine – without launching counter activities in curbing this unsatisfactory trend.

This key theme is also incorporated in the industry’s response to the recently proposed amendments in the Liquor Act. Only a dedicated and collective approach can be instrumental to stamp-out this ‘third force’ in our midst.

With this in mind the wine industry will continue to work hand-in-hand with DAFF and SARS, but then we also need the ‘Wine Tribe’ to blow the whistle, once they have any reason to believe that any producer, winery, cellar, distillery, manufacturer or retailer is acting outside the laid down tax and excise policy guidelines.

This then a serious call to action to send any and/or all information pointing towards any potential illegal/illicit trade directly to VinPro (Christo Conradie – christo@vinpro.co.za). In turn we will drive the process further and keep track of all incidents via the dedicated support rendered from DAFF and SARS.

Please ensure that any official ale complaint contains the following information: photos of the product, clearly illustrating the brand name, manufacturer, physical address, alcohol volume, volume of the container, retail selling price, date, name and physical address of the retail outlet. Although not all information will be displayed on any dodgy products, it is critical to collate as much possible.

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