Lockdown whiskey solution to local liquor industry woes

Daily Maverick

4 days ago

Six hundred bottles of Reminisce were made and they are exclusively available on the Darling Breweries website — except a bottle that was bought blind at a school fundraiser in 2023. (Photo: Lindsey Schutters)
Darling Breweries' managing director Tewie Roos still remembers the day the pandemic lockdown's unintended consequences arrived by the truckload. Retailers, barred from selling alcohol under Covid-19 regulations, sent back perfectly good beer, demanding credit. It stacked up on the brewery floor, eating into cash flow.
Some of it was days from its best-before date; some had already ticked over. Excise officials, locked down like everyone else, weren't around to supervise destruction. The only legal path to recovery was to spend even more money and turn it into something else.
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'People thought I was crazy,' Roos says, recalling his plan to distill the beer into whisky. 'Here we were, making a loss, and I wanted to incur more costs. But I saw a long-term opportunity.'
Partnering with master distiller George Dalla Cia, Roos shipped 30,000 litres of returned beer to a still in Stellenbosch. The result, five years later, is Reminisce. An unfiltered, naturally coloured, limited-edition whisky, packaged like a storybook (library card and all) and sold in numbered bottles.
Feeling the squeeze
Roos tells the tale of regulatory reality facing small brewers: 'The challenge that we see in the market is that legislation and excise is currently driven so high that approximately 20% of liquor in any store is illicit liquor, not paying excise.'
He gives Daily Maverick a back of the envelope calculation: 'If we take a bottle of brandy… your excise tax component at 42% will be in the region of R92 a bottle. Then you get guys who sell brandy at R90. How do you do that? It's not possible unless you don't pay excise tax.'
What this means for you
The Department of Trade, Industry and Competition has updated the Liquor Act, with ripple effects likely to hit your wallet and your choice of local brands.
For local producers:
Stricter licensing requirements and more detailed reporting mean higher admin and legal costs, which small producers can least afford.
With excise increases still linked to inflation-plus hikes, small brewers and distillers will continue to fight margins that are already wafer thin.
For the shelf price:
Compliance costs, higher excise, and potential moves toward minimum unit pricing (already trialled overseas) could nudge retail prices up, especially for entry-level spirits and beer in large formats.
If small producers can't absorb costs, some may cut product lines or exit the market entirely, leaving shelves dominated by big, well-financed players.
For consumers:
Expect more limited-edition, higher-margin products like Reminisce (R3,500 per bottle) aimed at premium buyers, while budget-conscious consumers may see fewer affordable craft options.
With Heineken and AB InBev dominating production, their pricing strategies will carry more weight, and less local competition could mean slower innovation.
Regulatory tweaks designed to formalise and control the industry could make your weekend drink pricier and less local, unless policymakers heed calls to give smaller producers a break.
Roos needs some mathematical grace for his numbers, but the point is that this creates what economists call a policy paradox — high excise rates designed to curb consumption and raise revenue instead incentivise tax avoidance. For craft producers like Darling Brew, a beer excise of R145.07 per litre of absolute alcohol sometimes exceeds production costs.
'Don't charge me as a small [producer] a maximum excise; incentivise me,' Roos argues. 'I employ much more people per litre than a major player. Rather incentivise the small guys because that creates real jobs on the ground.'
First, do no harm
But the industry's calls for lower excise rates run headlong into a stark public health reality. Dr David Harrison, CEO of the DG Murray Trust, challenges the narrative that regulation punishes the poor.
'The fact is that the legal liquor industry is a major contributor to injury, disease and death in South Africa,' Harrison argues in a statement shared with Daily Maverick. 'Alcohol is a factor in about half of all homicides, traffic accidents and gender-based violence in this country.'
Even if the claims about illicit trade are accurate — that illegal products represent a fifth of the market — Harrison points out that 'legally manufactured alcohol contributes up to four-fifths of the total alcohol harm in South Africa'.
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The trust's data reveals a troubling pattern: alcohol-related mortality in poorer communities runs 4.5 times higher than in wealthier areas.
'Many people in poorer communities drink to escape the hardships of daily life,' Harrison notes. 'The alcohol industry capitalises on their misery, flooding their communities with large quantities of liquor at lower prices.'
This isn't just about excise rates — it's about design choices that shape consumption patterns. Consider SAB's one-litre Castle Lager bottles, which Harrison notes contain 'enough pure alcohol to push a drinker's blood alcohol content well above the legal driving limit'.
These large containers sell for 2.5 times less per litre than equivalent amounts in smaller bottles — a pricing strategy that Harrison argues 'suggests a deliberate design to promote excessive consumption'.
Legacy by design
Research supports this concern. South African studies show that larger containers encourage people to drink more, making them a prime target for minimum unit pricing policies that have shown success in Scotland and Wales.
South Africa's liquor landscape has always been shaped by law, rarely in ways that favoured small producers or public health. The dop system kept farm workers dependent on alcohol until 2003. The 1928 Liquor Act formalised racial prohibition, pushing black South Africans into illicit shebeens. The 1924 KWV Act gave white wine farmers monopolistic powers to fix prices, regulate surpluses and monopolise exports for 70 years.
Today's market concentration — dominated by AB InBev and Heineken — represents the latest chapter in this story of regulatory capture and economic control.
How Reminisce was made Master distiller George Dalla Cia used a discontinuous salamander still to transform beer into whisky. (A 'salamander still' is named after the amphibian due to the visual similarity of the radiant heat source to a salamander's back.) The returned beer, averaging 5% alcohol, went through bain marie distillation, a gentle process that never exceeds 100°C.
The vapour passes over marble chips to neutralise preservatives, then through fractional distillation to concentrate flavour. From 800 litres of beer, about 60 litres of whisky at 70-75% alcohol emerge, later diluted to 46% for bottling.
Aged five years in re-charred bourbon casks, Reminisce carries a distinct honey aroma with a clean finish, almost IPA-esque (India Pale Ale) and oddly fruity. A spirit born of crisis, patience and a bit of lockdown alchemy.
Dalla Cia, who helped transform the returned beer into whisky, sees echoes of his family's Italian experience. His father left Italy in the 1970s amid Mafia influence, corruption and bureaucratic sabotage. A shipment of grape skins for grappa (the family's legacy spirit) was deliberately blocked until it rotted, thanks to competitors bribing port officials.
'I'm done. I'm out of here. I don't want to raise my children in this kind of environment,' his father declared before moving to South Africa.
The same forces of entrenched monopolies, skewed regulation and the vulnerability of small producers are still here, just in different guises. For Dalla Cia, that means innovating and lobbying for a system that doesn't punish the smallest players.
'It's about teaching people how to fish,' Dalla Cia says. 'Not just collecting the fish.' DM