Government prepares next week’s beer tax hike as more breweries go under

Over the past month, two more independent breweries have entered into liquidation while an additional brewery has entered into voluntary administration. This represents a continuation of a now well established trend that first began to emerge in January 2023. 

Despite this, the Federal Government has announced that the next biannual increase to Australia’s beer tax will come into effect next Monday 5 August. 

“Beer drinkers are set to be slammed by yet another excise tax increase at a time when people are already struggling with the rising cost of living,” said John Preston, CEO of the Brewers Association. 

“This tax has gone up twice a year for over 30 years. We’ve now got the third highest beer tax in the world.”

So far this month, Margaret River’s Black Brewery Co and Brew Barons (trading as Parched West End) have permanently shut their doors, whilst Sou West Brewery has officially wound up the process of closing its company after becoming insolvent in May. Geelong's Valhalla Brewing has also entered into Voluntary Administration, citing a major drop in hospitality revenue. Yesterday, Drinks Trade conducted this interview with Patrick Coghlan, CEO of CreditorWatch, who explained why Australia's hospitality industry has a higher chance of business failure than any other.

"If you think about it, from a hospitality perspective, there’s only so much that you’ll pay for a beer, for a coffee, for a bowl of pasta, for a sandwich. Unfortunately in the hospitality industry, you can’t pass on the cost the consumer," he said.

John Preston added, “we all know the benefits of people getting out and socialising with friends and family but these tax increases are making this unaffordable for Australians…. Enough is enough. We’re calling for the Federal Government to step in and cut the rate of tax for beers served in hospitality venues back to a sensible level.”

Currently, brewers are not yet aware what the new tax rate - which will be announced on 5 August based on CPI figures released today - will amount to. In February this year, CEO of the Independent Brewers Association Kylie Lethbridge correctly forecasted to Drinks Trade that the problem would continue to develop if the sector did not receive government assistance.

“Unless we get some relief from the federal government then we will see more businesses close and we will see more voluntary administrations and we will see more redundancies,” she said.

“It’s not just one state that’s being impacted by this over the other, and it’s not just one type or size or scale of brewery that are having those issues, so there’s no trend that we can see. It’s just those [breweries] that had accumulated that excise debt.

“Anybody that’s in the industry at the minute is looking at the next 12 to 18 months as still presenting some challenges. So, although some have seen that little bit of light at the end of the tunnel, it still looks like 2024 is going to be quite challenging.”

Australia’s spirits tax will also rise on the same day, causing similar backlash from the sector. 

Chief Executive at Spirits & Cocktails Australia Greg Holland said, “enjoying a drink with friends is one of life’s few simple pleasures for Australians who are currently struggling with the cost of living.

"Sadly, this custom is increasingly being priced out of reach for many people, thanks to relentless alcohol tax hikes every six months.”

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