A record hike in Australia’s spirits tax will be a crippling “double whammy” for distillers and spirits manufacturers already battling some of the worst conditions in the history of the industry.

The latest excise increase, based on CPI figures released today, comes on top of surging costs for freight, glass, cans and raw materials. The hike is estimated to translate to an additional $1 of tax to be paid on an average 700ml bottle of spirits (40% ABV).

“This is effectively a double whammy on spirits,” said Spirits and Cocktails chief executive Greg Holland. “It’s the biggest increase in almost 50 years, since our tax figures were updated in 1978, and in that time spirits manufacturers have been slugged with the GST and the RTDs (ready-to-drink) tax as well. “

Australia has the third highest spirits tax in world, under a complicated alcohol tax regime that has been condemned by multiple independent and government reviews.

“We know all Australians are feeling the pain of inflation but this outdated tax regime means the spirits industry is effectively punished twice,” Mr Holland said.

“Our members are already paying skyrocketing prices for inputs like barley, glass and cans, and facing freight charges that have more than doubled in some regions - and now they’re being asked to pay even more to the tax man.

“It is also important to remember government data shows most Australians are drinking more responsibly, often choosing to enjoy quality offerings like a gin and tonic, bourbon and coke, dark and stormy cocktail, or a good scotch or Australian whisky. On top of all the other cost of living pressures they’re facing, those millions of Australian consumers will now likely be slugged even more as a result of this excise increase.”

Australian Distillers chief executive Paul McLeay added: “This places an enormous burden on a local industry that barely existed a decade ago but is now highly acclaimed around the world, thanks to the hard work and creativity of Australian distillers. We should be celebrating them, not stifling them.”

Examples of cost increases over the past 6-12 months, as reported by the major spirits manufacturers operating in Australia and local distillers include:

Australia’s outmoded alcohol tax regime indexes spirits excise to inflation, creating a situation where the tax take from spirits compounds every six months and grows further out of proportion to other drinks containing the same proportion of alcohol. As a result, up to 60 per cent of the retail price of an average 700ml bottle of spirits in Australia is now tax.

Automatic increases in line with the CPI mean the Federal Government’s average tax take from the distilling industry, which includes the manufacturing of premixed spirits, increases by $100 million – $120 million every year.

Mr Holland said: “This tax is cannibalising our industry. It has an insatiable appetite; no matter how hard our distillers and manufacturers work to grow, it keeps taking more.

“We look forward to working with the new Federal Government to build a more sustainable future for the Australian spirits industry.”

ENDS

  

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ABAC recently retained JWS Research to monitor compliance of a random selection of its signatories (including Australian Distillers Association members) with ABAC placement rule 2. This placement rule requires alcohol marketers to use all available age restriction controls to exclude minors from viewing its Marketing Communications.

JWS Research have identified that the Instagram accounts and Facebook accounts of many of our members did not have available age restriction controls applied to prevent minors from accessing the account. Each member was contacted directly by the ABAC after it was advised in one of my newsletters, and they were asked to advise in relation to these accounts whether:

• the accounts are within your reasonable control (or that of someone acting on your behalf)?
• If not, explain your relationship with the account owner?

If they did have control, they were provided with instructions on how to activate age restrictions. Instructions for age restriction controls across Facebook, Instagram, Youtube, Twitter and Snapchat can be found here.

Australian Distillers participated in the pilot led by Convergence Tech to deliver a world-first Australian blockchain pilot that stands to radically overhaul a 100 year-old tax system and has the potential to recover at least $45m annually in lost tax revenue, based on KPMG analysis.

The National Blockchain Pilot has successfully demonstrated the potential of blockchain technology to improve tax revenues, combat fraud and enhance the productivity and competitiveness of the spirits industry on the global stage.

Importantly for our Members, once implemented, the capability will also help protect honest distillers from illicit competition selling spirits products at unsustainable price points or earning unfair margins.

We commend our Members, Government and Convergence.Tech for their close collaboration during the Pilot, demonstrating the benefits that public-private partnerships can achieve. We encourage the Australian Government to move forward with a full implementation of this capability to deliver these significant benefits for our Members, taxpayers and the broader economy.

“From a distiller’s perspective, the Blockchain Excise Pilot has the potential to streamline excise administration, reduce counterfeit product and parallel importation risks, lay the foundations for a “trusted trader” style arrangement with the ATO, and simply provide confidence to producers, as well as their investors, customers, and other stakeholders, that their excise obligations are 100% accurate, compliant and up to date. “

William Edwards - Founder at Archie Rose Distilling Co.

“By making sure there is compliance it means we won’t have rogue operators, creating a level playing field for everyone. And that’s probably the most exciting thing – the transparency and dynamism of the technology. It’s this capability and opportunity to unlock

more significant improvements that will drive strong uptake of the technology throughout the industry”

Paul McLeay - Chief Executive Officer of the Australian Distillers Association

Download the full report by clicking the image below.

The policy settings for the spirits industry in Australia were set more than thirty years ago. There have been minor tweaks since that time, yet the industry has had significant change and development.

Like the wine industry of thirty years ago, it took the industry and Government to work together to have a fresh look at the barriers that industry faced and the most economical and sustainable approach to secure the industry future growth.

One of the key transitions was the establishment of a Parliamentary Inquiry to give the industry an engaged review. The parliamentary inquiry process is bipartisan in nature and allows for a deep dive on all of the issues that affect the industry that the government has influence over.

The Australian Distilling Industry is at the stage where it is appropriate that the Australian Government has a significant review into our industry to ensure it has the opportunity for sustainable growth and is not held back by out of date and unnecessary policy settings.

We have an opportunity to outline the long-term needs for future growth of the industry and the value of creating a representative body as a key driver to achieve those longer-term objectives and pave the way for fundamental change in the industry that will support its continued growth.

The Safety and Sustainability Project Group has comprehensively updated their presence in the members portal. See here for updates including their role, video resources, toolkits, and useful links. Congratulations to Ian Schmidt for driving these member focussed resources.

Safety and Sustainability Project Group

As you may be aware, there are many ongoing discussions of technical standards for aged spirits in Australia. An example of which is the significant discussion about the term “Rum” used by Australian producers who are using the term without making Rum as defined by the Excise Act.

The Australian Distillers Association President and CEO were requested to engage with ACCC the Australian Government to determine our position. There have been several meetings with Australian regulators regarding the terms, including a border force and DFAT discussion with CEO Paul McLeay and Vice President, Cam Syme to discuss Geographical Indicators in the context of the Australian EU FTA. The concern was raised that Australia does not keep our own house in order, where the Australian Government was considering putting resources in place to protect international GIs.

Australian Whisky producers understand that Australian whisky and rum are unique. Our technical standards are not as cumbersome as some of our international producers. In Australia, "whisky" means a spirit obtained by the distillation of a fermented liquor of a mash of cereal grain in such a manner that the spirit possesses the taste, aroma and other characteristics generally attributed to whisky and has been matured by storage in wood for at least 2 years. Rum has a similar definition.

During the Australia UK Free Trade Agreement negotiations, the Australian Distillers Association, on behalf the Australian producers agreed to review our definition of Whisky and determine if the technical standard is contemporary, meets industry practices, and has the rigour to maintain consumer expectations.

As reported in the article ‘Australian Distillers Members experience a unique opportunity for professional development and networking with global peers as part of the recent UK Ireland Tour’, in June 2022 a delegation of 12 Australian distillers met with the Irish Whiskey Association and the Scotch Whisky Association for bilateral meetings to identify the obligations, benefits and compliance regime of implementing Geographical Indicators and other technical standards.

The Australian Distillers established a Technical Standards Project Group and have invited the Scotch Whisky Association to present at an open forum in August to all members.

REGISTER FOR THE EVENT HERE

At the Australian Distillers Association 2022 Conference in April, Greg Holland from Spirits & Cocktails Australia, advised participants of the opportunity to join him at the SpiritsEurope conference to be held in Dublin. The following delegates opted into a unique opportunity for professional development and networking with global peers.

The delegation consisted of:

Over the course of the program, the delegation engaged in roundtable meetings with our peers from the Irish Whiskey Association and Scotch Whisky Association to discuss key issues impacting the Australian spirits category, including technical standards, sustainability and trade with the UK and Ireland. These roundtable meetings were complemented by the delegation’s attendance at the spiritsEUROPE Congress in Dublin, which provided insight into the European experience of responding to rising inflation and supply chain issues in the wake of COVID, and trade issues emerging from Brexit and the negotiation of new EU and UK free trade agreements.

spiritsEUROPE also extended an invitation for Greg and Australian Distillers CEO Paul McLeay, as respective heads of our trade associations, to deliver a presentation on the impact of global and local spirits producers working together on joint advocacy initiatives. Their presentation was followed by a similar presentation from Chris Swonger of DISCUS, and together these sessions were used as a catalyst for a discussion among spiritsEUROPE members to consider their forward plan for global and local producers working together on issues impacting their domestic markets, and across Europe. DISCUS has invited us to present a similar proposal and organise a trade delegation at their conference in May next year.

The delegations’ engagements in Dublin were enhanced by positive interactions with the Australian Ambassador to Ireland, who attended the roundtable meeting with the Irish Whiskey Association and a dinner event with Spirits & Cocktails. The Ambassador shared his enthusiasm and support for the growth of Australian-produced spirits to be exported to Ireland and has been forthcoming with ideas and offers of support since our engagement with him.

Behind-the-scenes tours.

Additionally, the delegation attended a series of behind-the-scenes tours of distilleries and visitor experiences in Northern Ireland, the Republic of Ireland and Scotland. These visits were facilitated by colleagues at both Irish Whiskey Association and Scotch Whisky Association, with the generous support of several our members. These visits were also often led by distillers and senior managers of the visitor experiences, which provided several opportunities for meaningful discussions with the delegation.

The distillery visits and experiences included:

   

UK/Australia Free Trade Agreement

Additionally, there were meetings with Australian consular and trade officials in London to discuss the UK/Australia Free Trade Agreement and market entry opportunities for Australian-manufactured spirits products. As well as the World Spirits Alliance, where Australia was able to participate as a panellist to discuss nutrition and health labelling issues, in particular Australia’s recent experience of pregnancy warning labelling and our ongoing engagement with FSANZ on sugar and energy labelling. Thank you to David Ridden for being able to attend the component in Geneva.

The delegation also discussed key issues impacting the Australian spirits category including sustainability and trade with the UK and Ireland, insights into the European experience of responding to rising inflation and supply chain issues in the wake of COVID, and trade issues emerging from Brexit and the negotiation of new EU and UK free trade agreements

The delegation also benefited from behind-the-scenes tour and knowledge sharing from large and craft distilleries in Northern Ireland, Ireland and Scotland to deepen their understanding of the processes and scale of production.

The benefits of the tour include:

The Presentation made by the CEOs to SpiritsEUROPE and the presentations given by Irish Whiskey Association and Scotch Whisky Association are attached and can be accessed by members below.

Spirits & Cocktails Australia & Australian Distillers Presentation - spiritsEUROPE Congress

IWA-Australia Presentation 

SCA – Australia Presentation 

   

Let your spirits soar.

Established in 2015 and developed in close consultation with the executive of Australian Distillers, the Melbourne Royal Australian Distilled Spirits Awards are Australia’s first and largest national spirits competition highlighting the innovation and excellence of Australian spirits.

The Awards are shaped by an Industry Advisory Group who work closely with Melbourne Royal to maintain the program’s relevance and to develop its future direction. The Group features some of the Australian distilling and bar industry’s most highly regarded professionals –

Seb Costello – Head Judge, formerly of Bad Frankie

Julian White – Whisky & Alement

Luke McCarthy – Founder & Editor, Oz Whisky Review

Sebastian Reaburn – Anther Distillery

Stuart Gregor – Australian Distillers President, Four Pillars Distillery

Following a detailed review, the Awards have once again evolved to best represent the industry and its diversity and sees the introduction of a new trophy for Whisky.

After successfully delivering the Awards remotely through the lockdowns of 2020 and 2021, judging this year returns to in-person at Melbourne Showgrounds in August, with entries now open.

Key dates

For further information contact

Damian Nieuwesteeg

Email

To enter visit

melbourneroyal.com.au/spirits 

Australia’s Starward Whisky has been named the Most Awarded Distillery of the Year at the world’s largest and most competitive international spirit competition; the 2022 San Francisco World Spirits Competition (SFWSC).

Melbourne-based Starward is the first Australian distillery to take the top honour in the competition’s 22 year history, beating close to 5,000 of the world’s most renowned spirits including whisky, gin, and tequila from countries such as Scotland, Japan, USA and UK.

The Most Awarded Distillery of the Year title follows Starward’s win of 12 Double Gold and 3 Gold medals at the SFWSC in April 2022. This was the largest haul of perfectly scored gold medals by any distillery across the entire 2022 competition.

This title is only awarded to distilleries who have consistently produced the finest quality spirits, and Starward is thrilled and humbled to be awarded this global accolade.

Starward Founder, David Vitale said: “To become the first Australian whisky to be named the Most Awarded Distillery of the Year at the world’s most competitive spirits competition is a dream come true.” 

“Fifteen years ago we had an idea to bring an approachable and delicious Melbourne whisky to life and to receive this recognition confirms what we’ve always known, that Australia is home to some of the finest whisky and spirits in the world,” he said.

“This achievement would not be possible without the passion, commitment and shared dream of our team. With this win, we are excited to take Starward to new horizons both here and abroad,” David said.

Paul McLeay, CEO Australian Distillers Association said: “The Australian Distillers Association are very excited to celebrate with Starward on this momentous and historical win,” Paul said.

“This recognition will help further the industry’s emergence on the global stage and accelerate the growth of the Australian Spirits Industry. There’s exciting times ahead for both Starward and our Spirits Industry,” he said.

Starward’s award winning whisky is available for purchase at its website, at the Starward distillery in Port Melbourne, at certain bars and restaurants across the country and national drinks retailers including Dan Murphys, Vintage Cellars, BWS and Liquorland.