Every August, the tax on alcohol goes up, and while some businesses in the Hunter region of New South Wales try to absorb the hike, inflationary pressures are forcing many to pass it down the line to customers.
The alcohol excise is different for beer, wine and spirits, which is something distillers say needs to change.
“We have had non-stop emails coming in from breweries and distilleries, everyone saying the price increase is going to happen. It’s not an option for them not to pass it on,” Luke Tilse from The Happy Wombat and Young Street Hotel said.
“We are past the point of $100 per LAL and it’s making it unsustainable for craft distillers,” Michael Earp, the owner of Earp Distilling, said.
LAL is the duty rate per litre of alcohol.
Producers argue the constant tax increases are hampering growth, and even forcing some to close.
“We find the taxes are consuming 50 per cent of our monthly expenses and we are finding it very hard to keep on going,” Earp said.
The government uses the tax to limit consumption and related health impacts of alcohol abuse.
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Australia typically has one of the highest rates of alcohol consumption per capita in the world.
But in the last ten years that has been declining, leaving people in the industry to question why alcohol tax continues to rise.
“It affects demand – it affects the punters’ ability to go out and drink affordably,” Grant Wearin, who owns Modus Operandi Brewing, said.
Hunter craft brewers say despite the pressure on local businesses, they’re confident in the quality of their products.
“The international-owned guys have a huge cost advantage over us,” Wearin said.
“But one of the things we have in our favour is a flavour advantage and we work to that strength.”
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