Breweries feeling the pinch ahead of tax increase

Tue, May 30

A brewery northwest of Auckland is among the businesses renewing calls for the Government to step in ahead of the country's second-largest alcohol excise tax in 30 years.

From July 1, the price of a pint of beer and a glass of wine is set to rise following a 6.65% hike to the alcohol excise tax.

It comes after a record 6.92% increase last year.

Costs for ingredients and carbon dioxide are already soaring at Liberty Brewing Company in Helensville.

The brewery's co-founder and managing director Christina Wood says they're worried more tax could break them.

"It's getting us a little bit scared," she said.

Finance Minister Grant Robertson said the increase is in line with "the process that's been in place since the early 1990s, which is that increase is dictated by inflation".

But the executive director of the Brewers Association of New Zealand Dylan Firth said he believes a conversation needs to be held "about the way the system works".

"When we're seeing this type of thing continuing and into next year, we're definitely gonna be looking at another big hit."

While breweries will try and absorb the extra costs, they say it's inevitable some of the costs will fall back on the consumer.

The exact amount will vary from business to business.

"It'll go up, and potentially to the detriment of our sales," Liberty Brewing co-founder Joseph Wood said.

"There's an accepted price point on the shelf so yeah, it's gonna be interesting."

Winemakers are also preparing to make some tough decisions off the back of an expensive fallout from Cyclone Gabrielle.

"There's a lot of cost increases in the supply chain already and this is going to be another one," Babich Wines chief executive David Babich said.

But some argue the excise increase is positive news.

"It actually goes into our tax coffers, which means that the community benefits from that in a number of ways," Alcohol Healthwatch's acting executive director Rebecca Williams said.

"It supports our hospitals, it supports our police, and supports interventions for people who are experiencing harm from their alcohol use," she said.

"Harm affects the drinker in a short-term impact, but it also affects those who are non-drinkers — so we do see a significant burden for those who are not drinkers."

Joseph said he's voiced his concerns to Robertson.

"We were really hoping they might cap it like they did in Canada — it's been capped at 2%. In the UK they've stopped excise increases altogether," he said.


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