Excise taxes brewers' strength

Ross Lewis

Brewery battle lines have been drawn.

In one corner is the powerful macro machine. Lion and CUB, although known by other fighting names, have taken on all comers and conquered most, even if the form has dwindled over the past few years.

On the other side is the little guy in the David and Goliath beer duel. Made up of a lot of other small players the micro-brewing unit has been crafty, gaining a foothold in a growing market of wannabe contenders.

Yet their biggest challenge is common. While the divide between the industrialised brewers and their smaller counterparts has been heated recently their biggest issue would be better fought from a united front.

The Australian Competition and Consumer Commission is right to investigate why minor brewers are squeezed out of pub taps because of deals done by the big two.

Correct labelling is just as important as punters want to know more about what they are drinking and where it came from.

And the finger pointing over popularity or trends – as witnessed by the recent Budweiser Super Bowl advertisement controversy – mightn’t accurately represent an industry that in general terms is convivial.

But excise remains the devil.

And that requires a group response. Indeed, it might be the damage the taxation has done to the more popular brands that helps the entire industry.

Some Australian craft breweries are reporting that a third of their turnover is excise. Roughly $17 in every carton of beer around the 4.5 per cent mark goes to the taxman. Then it is whacked by the GST at the point of sale.

While there is a rise in micro beer sales the overall market is falling significantly – 8 per cent in the past six years. So, in effect, the government is hurting itself with its continued excise model because it is getting less of a return.

As Coopers boss Dr Tim Cooper said late last year, “It is now reaching the stage that the excise rises are counterproductive with the additional tax raised being offset by a drop in overall sales.”

A reduction in the tax, would make brews cheaper, encourage more to try more and open up opportunities for the smaller teams to get their products in a greater amount of places.

There is no doubt the cost of some craft beers, while understandable because of the resources, is prohibitive to some drinkers. Cheaper items encourages choice.

To achieve the excise cut will require a whole of industry approach.

And if it can be done then everyone is a winner.