Local and foreign spirits are neck and neck in South Africa
While international brands are counting on South Africa to be a vibrant market, competitive local producers are also stepping up.
*This feature was originally published in the March 2025 issue of The Spirits Business magazine.
South Africa’s spirits trade hasn’t had an easy ride of late. The country’s abrupt alcohol bans, imposed during and after the Covid-19 pandemic, offered a short-term solution to easing pressure on an overburdened healthcare system. But they left an indelible scar on the drinks industry, long at the mercy of rising inflation, currency fluctuation and the economic downturn. Ongoing financial pressures have also forced many South Africans to trade down to cheaper options.
But despite a squeeze on spending, the country’s premium-plus spirits segment is in growth, with a rising middle class, youthful demographic, and expanding population driving sales of whisky and Cognac, and fuelling a craft spirits and cocktail scene.
A “polarisation in spending” is occurring, says Russell Menezes, IWSR Drinks Market Analysis research director for Africa and Middle East. “There is a growing gap between wealthy and low-income consumers, affecting purchasing power, and driving a two-speed market, with premium products thriving,” he says. “Middle-income drinkers are increasingly choosing premium-and-above brands as a status symbol.”
Premium and above
South Africa’s “premium and above” market (which accounts for 13% of total spirits) grew in volume by 2% compound annual growth rate (CAGR) in the first half of 2024, compared with “standard and below”, which declined by 1%. Both are forecast to grow by 1% CAGR to 2028, according to IWSR, while South Africa’s total alcohol market is expected to grow at a volume CAGR of 3% to 2028. This may seem slight, but it comes at a time when spirits consumption in mature markets is either in sharp decline or slowing.
“We’re witnessing a clear trend of premiumisation in South Africa, where consumers are drinking less overall, but choosing to invest in higher-quality, premium spirits,” says Brendan Coogan, chief transformation officer for Africa Middle East at Pernod Ricard. “While overall volume growth has been modest over the past year, value growth in the premium segments has been strong.”
Categories that could stand to gain from this shift include Cognac, which has seen widespread global declines in recent years, with export revenues down by more than 10% in 2024, according to the Bureau National Interprofessionnel du Cognac (BNIC). China’s crackdown on luxury spending, crippling tariffs, and widespread destocking have had a major impact. Rémy Cointreau, Pernod Ricard and Moët Hennessy all cited double-digit Cognac drops in 2024, with China blamed for dragging down their wider spirits businesses, further weakened by destocking in the US.
Now, there is the looming threat of further tariffs for Cognac in the US. Both LVMH and Campari are reported to have bolstered their shipments to the US in December to get ahead of future difficulties. But despite the doom and gloom, South Africa has emerged as a bright spot. The BNIC reported an increase of 26.7% in volume and 24.1% in value of Cognac to South Africa last year, making it the spirit’s fourth-biggest market in 2024. Overall, South Africa’s premium brandy market – which holds a 17% share of the premium segment market – is in growth, and “skewing to Cognac”, says IWSR. The brandy category, which includes Cognac, is expected to grow by 3% CAGR to 2028, Menezes adds. “The brandy category is facing challenges, and is now mostly purchased for at-home consumption. But there is evidence of up-trading among wealthier consumers.”
Scotch too has seen global exports slide. But while Cognac has found some relief in South Africa, exports of Scotch to the region have fallen dramatically. Valued at £103.8 million (US$131.35m) in 2022, this figure dropped to £54.5m (US$68.7m) in 2024, while volumes fell from 38.6m in 2022, to 27.8m in 2024.
Nevertheless, whisky still dominates South Africa’s premium spirits market, with a 55% share, driven by South Africa’s Three Ships, Harrier, Vat 69, and Bain’s, and an increasing array of international brands, including The Macallan, Jack Daniel’s, Glenfiddich, and Johnnie Walker. The Glenlivet saw a 9% global sales drop in the first half of Chivas Brothers’ 2025 financial year “as a result of challenging US and Asian market dynamics”, but growth in South Africa, and India. The whisky category is expected to grow by 1% CAGR to 2028 (IWSR). “Single malt whisky is seeing a resurgence, mainly driven by high-income individuals,” adds Menezes.
Local industry expands
South Africa’s homegrown spirits industry is also expanding, nurturing demand for high-end drinks including gin, rum, and agave spirits. Last month Pernod Ricard announced that it had bought Inverroche – its first wholly owned African spirit brand. “Craft spirits have become essential to the consumer landscape – it’s less about a challenge to international brands and more about complementing them,” adds Coogan. Cape Town’s Hope Distillery, founded in 2014 by former lawyers Lucy Beard and Leigh Lisk, is one of many new distillers shaping South Africa’s craft spirits industry. They make a range of gins using local botanicals, and recently launched an agricole rum made from local sugarcane.
“There has been a maturing of the premium spirits market, particularly in the gin and Tequila categories, where the past few years have seen a huge increase in the number of market players, both international and local,” says Beard. Sales of flavoured and coloured gins are now slowing, she says, with a switch to more classic styles taking place. But gin doesn’t have an easy ride ahead. It currently holds a 13% share of South Africa’s premium spirits market, but is expected to decline by 3% CAGR to 2028, according to IWSR.
Vodka too, which holds a 5% share, is forecast to decline by 2% CAGR over the same period. “The gin category experienced significant decline in 2023,” says Menezes. “Craft gin in particular faced dwindling volumes, losing consumers primarily due to its higher price point in tough economic times. Craft gin is expected to face challenges in the future as it competes with established international brands. Retailers are likely to prioritise gins that sell quickly, leaving little room for smaller players.”
Agave spirits, on the other hand, are rising quickly, mirroring a global trend for Tequila and mezcal. Agave spirits hold a 7% share of South Africa’s premium market, and recorded volume growth of more than 60% in 2022 (IWSR), and the category is expected to grow by 3% CAGR to 2028, matching the forecast for premium brandy (including Cognac).
With the US enacting a 25% tariff on Mexican imports, could non-Mexican agave spirits steal a march on Tequila and mezcal? Sango is an African spirit made from African Agave Americana from the Karoo desert and Salmiana agave from South Africa’s Eastern Cape province. “We find that consumers are looking beyond international brands, and are more open to premium local alternatives, particularly in agave, gin, and emerging whisky brands,” says Damola Timeyin, co-founder of Spearhead Spirits, which produces Sango, as well as Bayab Gin, Vusa Vodka, and Mansas Whisky. “There’s growing pride in ‘made in Africa’ products, with local provenance, local ingredients, and heritage-driven narratives gaining traction. African craft spirits are now competing on quality rather than just price, creating a consumer shift from purely imported luxury spirits to homegrown premium brands.”
Hope Distillery makes a small-batch spirit made from African Esperanza agave. “We found it a challenge initially, as no one understood agave and the Mexican designation of origin issue. Now there is a growing awareness of agave spirits,” says Beard. “More Mexican options are now available locally, and this has increased the understanding of what agave is.”
March also saw the return of the biannual Ajabu cocktail and spirits festival in Cape Town and Johannesburg. Co-founded by Colin Asare-Appiah and Mark Talbot Holmes, it highlighted the growing diversity of South Africa’s spirits industry. “In terms of flavour experimentation, South African distillers are pushing the boundaries with botanical infusions such as rooibos, buchu, and wild rosemary, creating terroir-driven spirits,” says Asare-Appiah. “Many are also incorporating indigenous herbs and spices, like marula (Amarula) and African black pepper into their products, moving away from traditional European gin botanicals.”
Investment by international brands and global competition brings challenges for local producers, but it’s also a “catalyst for innovation and growth”, says Asare-Appiah. “The key for South African brands will be finding a balance between competing with the big players and staying true to their unique heritage and identity.”
Overall growth in South Africa is far from stratospheric. In the first half of its 2025 financial year, Pernod Ricard reported “slight growth and share gains” in South Africa amid “difficult macroeconomic conditions”.
Diageo reported 5% growth in organic spirits sales in Africa in its 2025 interim results, and gains in market share of gin in South Africa driven by Gordon’s.
Heineken’s 2023 acquisition of Distell is expected to bring further investment, and South Africa’s craft spirits scene continues to thrive. Coogan says it’s still an emerging market, but one that is in “dynamic transformation”, which benefits from a growing population and affluent consumer base increasingly willing to pay a premium.
South Africa is not immune to global challenges. But as mature markets like China, the US, and Europe wrangle over tariffs and tackle slower sales, South Africa offers an enticing, and potentially less complicated, alternative.
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