Australia: Independent brewing up by over tenfold in the decade to 2016

Australians have never had more choice when it comes to craft beers, with independent brewing growing by over tenfold in the decade to 2016, according to a report commissioned by the Independent Brewers Association (IBA).

Back in 2006, just 30 businesses made up Australia's independent craft brewing sector, by 2015-16 that number had grown to 379, with nearly two-thirds located in regional Australia.

The growth has continued despite a decline in overall beer consumption.

The analysis by Essential Economic shows production is still on a minute scale compared to the big breweries, accounting for just three per cent of all beer produced in Australia.

But it is where 73 per cent of people employed in beer manufacturing in Australia have found work.

The IBA's executive director Chris McNamara will use the report to push for excise relief.

It will encourage independent brewers around Australia to write to members of parliament about the industry's excise regime.

Nearly 60 per cent of these businesses are based in Victoria or New South Wales, with Queensland and Western Australia home to another 25 per cent.

Recently one of the United States' most successful independent brewers, Ken Grossman, discussed the oversaturated US craft beer market, and warned Australia could face the same fate.

"The growth rate [of craft beer] is slowing — it had been double-digits for more than 10 years, and if you project that out, there's no way it could continue," he said.

Mr McNamara said that wasn't a concern here.

"Everyone is aware there's only so much space to be found on supermarket shelves.

"While we have big issues at the moment accessing tap space in pub because of the big duopoly, we are aware that it's an issue and everyone has to keep an eye on it."

The success being celebrated by the sector has not come easily with many brewers pointing to heavy excise duties as a major constraint to growth.

Nearly a quarter of all revenue earned by craft brewers is paid straight to the government as excise as soon as the product leaves the brewery.

It is a burden the Essential Economics report point out is not only higher than other alcohol products, but also higher than other countries.

Mr McNamara said heavy taxation was a barrier to further growth.

"Because excise is charged as soon as beer leaves the brewery, if they're lucky businesses will get that back from the customer in 30 days.

"But more often than not it's more like 60 or 90 days, for small businesses that's a huge cash flow issue."

Australia's alcohol taxation regime is complex and unevenly distributed.

Beers attracts an excise based on the amount of alcohol per litre it contains, the size of the container it’s sold in, where its brewed and for what purpose.

Spirits are taxed at A$82 per litre of alcohol, when the average alcohol content is 40 per cent — a rate 20 times that of wine.

Wine has its own separate tax regime that comes with a generous (and soon to be lowered) rebate of up to A$500,000 annually.

The controversial Wine Equalisation Tax (WET) rebate was originally established to boost regional communities.

In the past, regional distilleries have questioned the narrow focus of the scheme, saying their contributions to regional economies should be supported as well.

Mr McNamara said with 65 per cent of independent brewers based in regional locations, the WET rebate scheme was exclusionary and it focus was too narrow.

"We understand that when the WET rebate came in we were not as big an industry as we are now, so what we're asking for now is government to reassess how they support the various industries, and to give us a fair go in comparison to what the wineries get."

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