This morning, representatives from Spirits & Cocktails Australia and the Australian Distillers Association addressed the House of Representatives Standing Committee on Industry, Science and Resources as part of its ongoing inquiry into food and beverage manufacturing in Australia.
According to the Committee’s Chair Rob Mitchell MP, the hearing’s purpose was to “hear about the barriers the industry faces, and what innovations are on the horizon to enable the Australian spirits industry to realise its full potential.”
One of the witnesses that appeared at today’s hearing was Mark Hill, Treasurer at Spirits & Cocktails Australia and Managing Director at Suntory Global Spirits Oceania.
“Suntory Oceania’s new $400 million carbon neutral facility in Ipswich, Queensland, provides the Committee with a real time example of the positive impact that direct foreign investment can have on the Australian food and beverage manufacturing sector,” he said.
“However, there is little or no incentive for global spirit companies to invest in the expansion of the Australian spirits industry while our excise rates are so overwhelmingly uncompetitive with other countries like Japan, the United States, Ireland, Scotland and Mexico.”
David Vitale, Vice President of the Australian Distillers Association and Founder of Starward Whisky, outlined the inequalities in the support provided to Australia’s spirits industry when compared to other liquor sectors such as wine.
“It is extremely difficult to build an export market for Australian spirits without the coordinated support that only Government can provide,” said Vitale.
“When Starward shows up at prestigious international trade shows like ProWein, I blow my entire export marketing budget on a trestle table that gets lost in the acres of exhibitors, while Australian winemakers have pride of place in an elaborate pavilion, proudly showcasing their provenance.
“It’s unfortunate that when we ask Austrade for the same opportunities, we are informed that their support does not extend to spirits. The consumer demand is there, we just need Government to recognise the potential of our industry.”
Another common thread shared by witnesses was Australia’s current positioning as an emerging world leader in craft spirits production, highlighted by recent strong performances at both the IWSC 2024 and the SFWSC 2024. As Spirits & Cocktails Australia’s Director and Lark Distilling’s CEO Satya Sharma puts it, “new world whisky is currently on the rise in many corners of the world.”
Holly Klintworth, President of the Australian Distillers Association and Managing Director at Bass & Flinders Distillery, added that “Australian spirits celebrate flavour and unique native ingredients that are not found anywhere else in the world. This provides Australia with a point of difference from other spirits-producing nations. That’s why our industry needs coordinated, targeted support to both succeed at home and take distinctive Australian spirits to the world.”
The final key message outlined in the hearing was to take heed of other positive international examples, such as the UK Government’s decision to freeze its excise tax.
Kylie McPherson, member of Spirits & Cocktails Australia and Vice President/director of Public Affairs at Brown-Forman Australia said, “after the UK Government froze excise in 2015, Brown-Forman invested approximately $500 million in acquiring three Scotch whisky distilleries. Nine successive freezes in the U.K. have provided certainty to further invest in expanding these businesses, tripling exports and significantly enhancing their tourism offerings as a result, among other economic benefits.
“Unfortunately, the current conditions and the uncertainty borne of Australia’s excise regime – which is the third highest spirits tax in the world – are inhibitors for global companies like ours making such an investment in this market.”
The House of Representatives Standing Committee on Industry, Science and Resources at Parliament House will use the insights provided during today’s meeting to guide its ongoing inquiry into food and beverage manufacturing in Australia. The Committee has indicated that it will conduct further public hearings between June to August 2024, with the next scheduled for Thursday 13 June.
At the hearing, Lark’s Satya Sharma outlined the potential opportunity that a well supported spirits industry could provide for Australia’s manufacturing sector.
“Australia has an opportunity to grow our category into something of global significance synonymous with quality and innovation, following in the footsteps of Japanese and Scotch whisky, while contributing substantially to domestic employment and economic growth,” he said.
Sharma’s perspective is reflected by Nicole Lestal, Director of Spirits & Cocktails Australia.
“While Australian spirits account for 20% of alcohol consumption, it accounts for 50% of alcohol taxes,” she told the Committee.
“This structural disadvantage impedes innovation and opportunities to re-invest in Australian spirits manufacturing.
“Our global spirits industry experience tells us that when governments act decisively and across multiple fronts to provide coordinated support, it incentivises investment to achieve scale and unlock further opportunities for economic value-add and innovation.”
Paul McLeay, Chief Executive of the Australian Spirits Association, believes that Australia’s distilling industry should be integral to the Federal Government’s Future Made in Australia policy.
“If we do not act now, Australian distillers will be outpaced by other emerging spirits markets in meeting growing consumer demand for premium products – and Australia will miss out on the economic windfall that could be ours,” he said.
