DOUBLE STANDARDS?

According to a recent article by the Independent Brewers Association, Australia has the third highest taxation on beer in the world. What’s perhaps more striking is that this excise tax is raised twice a year, while the same tax on wine has remained the same since 1999.

These taxes are seemingly here for a reason: alcohol can cause undeniable damage to the community, which these excise taxes are meant to help alleviate. However, when comparable products aren’t subject to the same conditions; two large, foreign-owned breweries have 83% of the beer market share; and craft breweries routinely collapse under financial pressures, the continued increase of this tax begins to feel not only arbitrary but irresponsible. 

WHO BEARS THE BRUNT?

In September 2024, 48% of our industry reported that they are not able to sustain profitability. Further, at least 47 breweries have entered voluntary administration or gone under in the past 18 months. In fact, this number is thought to be even higher, as it doesn’t include quiet or unpublished closures. Nor does it account for those breweries who have reduced staff or implemented austerity measures. 

Independent breweries employ over 50% of the entire brewing industry but only make up approximately 8% of market share. 40,000+ Australians are employed in the agricultural, manufacturing, distribution and hospitality industries all directly tied to independent beer production. Meanwhile, an economic impact analysis from 2024 confirmed that the craft beer industry contributes around $3.53 billion annually to the national economy. 

This is in the face of aggressive competition from international conglomerates, Asahi and Kirin, who are estimated to have margins of around 40%. By comparison, the profit margins for smaller breweries is often less than half that, at 15-20% on average.

WHERE TO FROM HERE?

We’ve just experienced our 84th excise tax increase since 1983, with a 20% increase since 2020 alone. This cost affects not only breweries but also the customers they serve, as price increases must be worn by producers, consumers or both. Against the backdrop of a cost-of-living crisis, that inevitably means breweries struggle to stay alive. So, is the collapse of the craft beer industry really worth continued increases on excise taxes?

The disproportionate taxation of beer means that consumers are inadvertently driven towards alternatives. Beer is taxed eight times higher per standard drink than cask wine, for example, with 21% of the price paid on a typical six-pack of a 4.5% abv beer being made up by excise tax. If the objective of such a tax is to steer people away from problem drinking, then these numbers don’t paint a picture of a very effective strategy. 

It seems that the public is gradually becoming aware of this issue. A 2024 poll showed that 58% of Australians feel that excise rate rises should be stopped. But what can you do to help see that happen? Share this article with your community and consider writing to the MP for your local electorate about the issue. And of course, choose craft beer over monopolising corporations when you find yourself at the bar or bottle-o!