Australia: Beer prices set to rise in August

Beer prices will froth up in August as Australian craft brewers say they are struggling under heavy tax pressures, The North West Star reported on July 24.

With the updated excise tax to be released on July 31 brewers are expecting a rise of around four per cent.

Canberra's BentSpoke Brewing Co. founder Richard Watkins said the excise rise would likely mean consumers would pay a few extras dollars at the till.

So expect a A$60 slab of beer to cost another A$2.36.

Craft breweries have struggled to rebound after the pandemic and Mr Watkins said increasing taxes without improving government support for small businesses was hurting the sector.

"In a tight economic times the government should be supporting Australian owned companies that are investing money back into the economy, into Australia," he said.

More than 600 craft brewers in Australia contribute A$1.93 billion annually to the economy, according to KPMG.

Craft breweries employ more than 10,000 people, which is 51 per cent of the industry, with many in regional areas.

Excise tax is raised in line with the consumer price index (CPI) twice per year. This happens on August 1 and February 1.

Brewers receive a A$350,000 excise rebate each financial year. That financial cushion means small breweries, with low alcohol production, may pay no excise or very little within the year.

But large commercial breweries may exhaust the rebate in a matter of days. A medium-sized brewery, such as Bentspoke, pays more than A$350,000 in excise in a month.

Mr Watkins is campaigning for the rebate amount to be raised rather than for a tax cut.

"We've got to compete with the big multi-national companies," the brewer said.

He said 50 per cent of the cost for a large commercial brewery to make a keg of beer was in tax. As a medium-sized brewer, he paid 25 per cent.

"If [the government] were to give us a tax break, that's going to help the bigger brewers more because they're going to be able to reduce their keg prices by more than we can because it's a large percentage of their cost," he said.

"That's why we're not asking for a tax relief. What we're asking for is an increase in the rebate to allow a fairer playing field.

"The government should really be putting the rebate up by the same amount as what they're putting the tax up because for the bigger breweries A$350,000 doesn't make any difference to them.

"But for small breweries having that excise rate go up makes a massive difference."

Mr Watkins and other Australian craft brewers are heading to Darling Harbour's Tumbalong Park on December 6 and 7 for BeerFest Sydney. It's a festival that aims to support brewers by hosting the event without taking a clip of the profits.

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