At the recent Spirits Victoria Association Annual Conference in Ballarat, Brogan Carr announced she was undertaking PhD studies at Melbourne University to investigate the chemical and sensory contributions that native botanicals have for Australian Gins.

Spirits Victoria considers this an extremely important research project as there are very few published papers on the topic and this research will vastly improve our industry’s understanding of the impact these ingredients have to a product category that is the largest in the craft space in Victoria. Spirits Victoria hope this is the first step towards an Australian Botanical Library.

Brogan is on the start of a long journey to collect data and conduct detailed chemical analysis, but as a first step, she needs our help. Brogan has developed a questionnaire that allows distilleries to provide information in a confidential manner - all information is de-identified and stored on a secure cloud server.

The results of the research will not be available for some years, but we hope to be able to publish them when they are available.

So this is our call to action - help Brogan by completing the Survey, which can be accessed using the QR code below (The password for the QR code is SVA24). You can contact Brogan to ask questions about the research at carrbl@student.unimelb.edu.au.

Thank you for assisting what we hope is the first of many research projects that can help our industry improve and develop.

Australian spirits tax rises to $103.89 today in another cruel blow to spirits manufacturers, venues and consumers who are already grappling with challenging economic conditions.

The world’s third highest spirits tax has now risen by more than 20 per cent since the onset of the pandemic, thanks to a system of six-monthly indexation to CPI that dates back to an era where there were only two distilleries in Australia.

Australian Distillers Association chief executive Paul McLeay said there are now more than 700 distilleries in this country making world-class spirits, and their prospects depend on urgent intervention by the Federal Government.

“The continued Government inaction on this issue is incredibly frustrating for our industry, which already contributes $15.5 billion in added value to the Australian economy and supports more than 100,000 jobs,” he said.

“We know that our economic potential could be much greater. Analysis from Mandala Partners has demonstrated that spirits manufacturing can be a $1 billion export industry for Australia by 2035, but only if we have the right policy settings.

“The Federal Government must act now by freezing the spirits tax and partnering with industry to create an export body for spirits, just as it has done so successfully with Wine Australia over recent decades.”

Chronic instability hampering ambitions

Craig Michael, director of Bellarine Distillery in Drysdale, Victoria, said the tax is now $25 per litre higher than when the company began operations in 2015.

“These six-monthly increases are becoming increasingly difficult for our business to sustain, and they are impossible to plan for,” he said.

“How can we accurately undertake financial modelling and make business decisions if we don’t know what tax rate we will be paying in six months’ time?”

Hitting everyday punters’ hip pockets Night Time Industries Association chief executive officer Mick Gibb said the dreaded six-monthly tax increases are yet another impost on struggling hospitality venues.

“Every time the tax increases, the bar owner has to pay more for the tequila in that margarita, the gin in that martini or the vodka with that soda,” he said.

“Sometimes venues have no choice but to pass on these costs by increasing their prices. That ends up hitting the hip pockets of everyday punters who then say, ‘I’d love to go out more, but I just can't afford it’.”

Gibb said the tax increase compounds the existing inflationary pressures impacting venues, such as rent, electricity, freight and insurance.

“But in contrast to those unavoidable cost increases, these six-monthly tax hikes are completely at the Federal Government’s discretion,” he said.

“Freezing the tax is a sensible measure to ease the pressure on venues and consumers, and will also help the Government achieve its goal of reducing inflation.”

Spirits & Cocktails Australia chief executive Greg Holland says the latest tax increase simply cannot be justified in the current economic circumstances.

“Enjoying a drink with friends is one of life’s few simple pleasures for Australians who are currently struggling with the cost of living,” he says.

“Sadly, this custom is increasingly being priced out of reach for many people, thanks to relentless alcohol tax hikes every six months.”

The Federal Government today confirmed the world’s third highest spirits tax will be increased yet again on 5 August to $103.89 per litre.

The 5 August CPI increase will be the 75th tax hike on spirits since automatic indexation was introduced by Paul Keating in August 1983, in his first Budget as Treasurer.

Spirits & Cocktails chief executive Greg Holland said Keating’s Budget speech of the day demonstrates it is completely absurd that these tax increases are still continuing in 2024:

“The new system will afford a greater degree of stability for consumers and industry alike.

“These traditional excises will rise gradually in line with inflation and as wages and other incomes themselves increase.”

Paul Keating, August 1983 Budget Speech

“Automatic indexation was introduced to suit the economic conditions of the day. It was never intended to continue indefinitely,” said Holland.

“Far from rising ‘gradually’, as Mr Keating intended, spirits tax has now increased by almost 20% in the last four years.

“Far from providing ‘stability’, the Australian spirits industry is now suffering from an extremely unstable investment environment, thanks to these tax hikes every six months.

“As for wages? Australia today has some of the worst real wage growth of the OECD’s 38 member nations.

“Further increases to this tax simply do not pass the pub test.”

Australian Distillers Association chief executive Paul McLeay said the current excise burden is even more egregious, given the evolution of the spirits manufacturing industry over the last 41 years.

“There were only two distilleries in Australia when these six-monthly tax hikes began in 1983,” he said.

“Today there are 700 distilleries and we want to work with the Federal Government to build a major export industry that Australians can be proud of, just like our globally renowned wine industry.”

Albanese Government holds all the cards

McLeay noted Treasurer Jim Chalmers’ recent statement that Australia, ‘has been dealt the most incredible cards as a country’.

“The Treasurer was speaking in relation to the Government’s domestic manufacturing agenda, and in the case of spirits, his words certainly ring true,” said McLeay.

“We have unrivalled access to base ingredients like grains, sugarcane and grapes, rare native botanicals for gins and liqueurs, and an incredible inventory of wine barrels for maturing dark spirits.

“It would be a terrible shame if this enviable opportunity was squandered by continued Government inaction on spirits tax.”

The world’s third highest tax on spirits will be increased yet again on 5 August, punishing cash-strapped consumers and inflicting more damage on Australia’s promising spirits manufacturing sector.

Spirits & Cocktails Australia chief executive Greg Holland says the impending tax increase simply cannot be justified in the current economic circumstances.

“Enjoying a drink with friends is one of life’s few simple pleasures for Australians who are currently struggling with the cost of living,” he says.

“Sadly, this custom is increasingly being priced out of reach for many people, thanks to relentless alcohol tax hikes every six months.”

Holland said it is now abundantly clear that the automatic indexation of excise to CPI has outlived its usefulness as a revenue-raising measure.

“The Federal Government’s own data has repeatedly demonstrated that rising alcohol excise is contributing to the stubborn inflation problem that it is trying so hard to address,” he said.

“Meanwhile, our hospitality sector is on its knees. Another tax increase will only increase the cost burden on struggling venues.

“At $101.85 per litre, the tax is already so absurdly high that it has lured organised crime syndicates into the bootlegging of illicit alcohol*.

“And, the Government has repeatedly been forced to downgrade its spirits excise revenue forecasts, suggesting we have already reached the limit of what consumers are prepared to pay for spirits.”

‘Ready’ Made In Australia

Australian Distillers Association chief executive Paul McLeay said the current excise regime is at odds with the Government’s objectives of boosting domestic manufacturing and trade.

“The Government has allocated $22.7 billion over the next decade to its Future Made In Australia policy, which we are fully supportive of,” he said.

“However, we hope these lofty ambitions will not be at the expense of quicker wins in developing manufacturing sectors with strong growth prospects, such as distilling.”

McLeay said there are now more 700 distilleries in Australia that are Ready Made to deliver a $1 billion export industry by 2035, as demonstrated in economic modelling undertaken for the Australian Distillers Association by Mandala Partners.

“We don’t need billions in Government funding to make this happen, just some relief from these untenable six-monthly tax increases,” he said.

“We are calling for spirits tax to be frozen at its current rate for two years. This would have a comparatively modest budgetary impact in the context of the Government’s domestic manufacturing agenda.

“This would provide the stability for a broader review of spirits excise settings, so we can create the right conditions to attract capital investment, scale up manufacturing capabilities and grow exports.”

ENDS

*Fake booze: 'It's scary and the public needs to be warned' (The Age, 27 April 2024)

Over 240 Australian Distillers have invested in building their skills and knowledge by completing the Australian Distillers Association's "Introduction to Distillery Safety Courses" over the past few months.

With over 17 courses across the country and much more planned we encourage you to visit our events and distillery safety course pages on our website to register for the next course in your area. 

Designed to provide essential safety training for individuals working in an Australian distillery, covering key safety requirements and responsibilities. It emphasises the importance of adhering to safety protocols and highlights the potential consequences of non-compliance.

Learning outcomes include:

This one day, in person course is for Australian distillers or those aspiring to work in an Australian distillery. 

The Australian Distillers Association appeared before the Inquiry Into Food and Beverage Manufacturing in Canberra and made our case to freeze the current excise rate, establish a Spirits Australia body and more.

The Commonwealth House Standing Committee on Industry, Science & Resources is currently conducting a Parliamentary Inquiry which is investigating the opportunities for expanding innovation and value-adding in the food and beverage manufacturing industry in Australia.

The Inquiry has visited Archie Rose and Hickson House Distilleries. The inquiry conducted hearings in Sydney and received evidence from Archie rose and Hickson House. They appeared with Diageo.

The inquiry also conducted hearings in Canberra to hear from the peak bodies, Australian distillers Association and Spirits & Cocktails Australia. Holly Klintworth and David Vitale represented ADA and were supported by the Chief Executive.

The Committee will also be visiting our members, Lark in Hobart and Starward Melbourne.

Major Themes for Food and Beverage Manufacturing in Australia

Below is a summary of the submission made by the Australian Distillers Association.

1 Review of Excise

We supported the strong calls for excise reforms made by previous witnesses from Spirits and Cocktails Australia, as well as those made by Hickson House, Archie Rose and Diageo in the previous Hearings. In fact, we noted the committee has nearly 50 submissions to this inquiry that call on the urgent need for excise reform in some form or another.

Freeze for two years to provide certainty for investment, allow for reinvestment and create jobs – particularly in regional areas.

Use the two-year freeze to conduct a comprehensive review of excise. Current policy settings were put in place 40 years ago and are no longer fit for purpose. There were two. Australian distilleries that are in operation when the tax regime was put in place – there are now 700 and the settings are not fit for purpose.

We also called for an urgent review of the Remission scheme. This has been in place for nearly 3 years, and as you can see from the submission from Medium sized producers, there are serious implications of the “one size fits all” approach that has significant consequences for a growing industry and acts as a handbrake to growth.

We call on the government to sit down with industry to review the operations to ensure they align with stated public policy outcomes.

2 Strong and sustainable growth to add value to the economy

Like wine, Australian spirits come from the soil. We use Australian grains, grapes and sugar to produce our product. These are enhanced with Australian botanicals and casks to produce a uniquely Australian product. The value add in our industry through the manufacturing process is significant, and arguably, more dramatic than any other industry.

David Vitale from Starward turns $300 per tonne of barley into $40,000 of whisky

Holly Klintworth from Bass & Flinders turns $16K worth of wine into over $1.6 million worth of brandy

You heard from Will Edwards at the Sydney hearings that their partnership with Voyager, they innovated to create Australia's first commercially available native timber-smoked malt, eliminating the need to import thousands of tonnes of peated malt from the UK, and creating a highly value-added Australian grown and made product able to be sold for an approximately 400 per cent premium to the feed barley farmers in the region we previously relied on.

Therefore, we ask the committee to consider:

This can be further supported with:

3 Future workforce and skill needs

Term of reference 6

Expand the opportunities and reach of the National distillers Institute for industry specific training – because there is a distinct lack of industry specific training (rec 22)

Safety courses should be mandatory for new and renewals of licenses (rec 23)

Industry accelerator program (rec 25)

4 Support further innovation and sustainable growth in the sector

Term of reference 7

Freeze the excise to encourage reinvestment (rec 28)

Create a body called Spirits Australia dedicated to promoting Australian spirits, including through marketing, improving regulation, and supporting innovation.

Responsibilities for Spirits Australia could include:

As allowed for in the new Constitution and voted for by members, the Australian Distillers Association now has new membership levels.

We invite all members to check their membership level in their record card – ‘profile’, by logging into the member management system via the website. If you feel your membership level should be changed, please contact Michael to advise. Automated renewals will be sent out, and will be amended where required if the membership level needs to be adjusted.

For further details and information on the membership levels, please review the ‘membership categories’ page on the website.

If you are new to the industry, and you are a distiller or intending to be a distiller and are in the process of establishing your business and have sold less than 1,000 bottles, you are eligible to join as an Establishing Member. The fee is only $250 per year and gives you access to all of the resources including safety, training discounts, compliance and members portal. This level of membership does not allow you to vote in any meetings as you are not a commercial distiller.

The three main FULL membership levels are

Small producer: any producer who is an existing voting member of the Association or is in production and the production that enters the home market is below the Alcohol Manufacturers Remission, which is $350,000 at time of establishment.

Medium Producer: any producer who produces volume to exceed the automatic remission at any time in the current financial year or is projected to exceed the automatic remission at any time in the year.

Large producer: any commercial producer that exceeds 50,000 LALs of production in any 12-month period.

We also have two categories of membership to support and engage our valuable industry and trade suppliers. They are:

Industry and Trade: this category of membership is for related supply chain who are in an aligned industry and share our philosophies and values. (Non-Voting)

Commercial Partners: Industry partners that have demonstrated a commitment to the industry that is recognised as a strategic relationship. (Non-Voting)

Congratulations to the new leadership team of the Australian Distillers Association. The executive have been elected until the first board meeting after the next Annual general Meeting.

Board Members

The Executive are supported by a new board. Board positions are representative from each of the six Divisions and they will hold office for a two year period, with half board elections held annually. As a transitional arrangement, half of the board will be elected only until the next AGM. The new board, in addition to the office holders above, are:

On Monday 27th May 2024 the Australian Distillers Association AGM was held. Prior to the meeting the new Australian Distillers Association Constitution had been widely canvassed with Members with recommendations.

The Board of the Australian Distillers Association recommends to Members to vote in Favour to the following resolutions that give the new Company effect.

Special Resolution 1 

“This duly constituted General meeting of the Australian Distillers’ Association Inc:

Further, we give notice of the following transitional arrangements.

The Board of the Australian Distillers Association recommends to Members that from today’s date, the following provisions come into effect.

Special Resolution 2

“In accordance with clause 22 of the Constitution:

1. There will be the following classes of Voting Members of the Company:

a. Small producer: any producer who is an existing voting member of the Association or is in production and the production that enters the home market is below the Alcohol Manufacturers Remission, which is $350,000 at time of establishment.

b. Medium Producer: any producer who produces volume to exceed the automatic remission at any time in the current financial year or is projected to exceed the automatic remission at any time in the year.

c. Large producer: any commercial producer that exceeds 50,000 LALs of production in any 12-month period

NB Once your sales result in you moving up to a higher membership class, you maintain that level of membership unless the Board approves otherwise.

2. There will be the following classes of Non Voting members

a. Establishing: this is for members who have begun the distilling journey, are in the process of establishing their business and have sold less than 1,000 bottles. You are required to advise the Company once more than 1,000 bottles have entered the home market. There is a maximum of two years you can be in this category of membership, at that time, you automatically become a small producer, subject to meeting eligibility requirements, even if you have not sold any product, or your membership lapses. You can reapply for membership.

b. Industry and Trade: this category of membership is for related supply chain who are in an aligned industry and share our philosophies and values.

c. Commercial Partners: Industry partners that have demonstrated a commitment to the industry that is recognised as a strategic relationship.

3. If you are eligible to be a Voting member, you are not entitled to be a Non voting Member.

In accordance with clause 16 of the Constitution:

4. At time of establishment the following fees are set as follows (plus GST)

a. Small Producer: $750

b. Medium Producer: $1,000

c. Large Producer: $2,000

d. Establishing: $250

e. Industry and Trade: $750

f. Commercial Partners: by negotiation

5. Transition arrangements allow for existing members to have the new rates at the time their membership renewal falls due. For new and lapsed Members, the new fee structure takes immediate effect.

6. In accordance with clause 82, the following people will be the first Directors and will hold office until the end of the next Annual General Meeting at the expiration of their term. These people are:

a. David Ridden, QLD, 2 year term

b. Eddie Brooks, NSW, 2 year term

c. George Georgiadis, SA, 2 year term

d. Holly Klintworth, VIC, 1 year term

e. Ian Schmidt, SA, 1 year term

f. James Young, WA, 1 year term

g. Kate Sinfield, WA, 2 year term

h. Kristy Lark, TAS, 1 year term

i. Matt Hobson, QLD, 1 year term

j. Sebastian Reaburn, VIC, 2 year term

k. Stephen Parry, TAS, 2 year term

l. Vanessa Wilton, NSW, 1 year term”

Voting resulted in a unanimous acceptance of all recommendations.

At the subsequent Board meeting it was agreed that ASIC will be duly informed and there will be a ballot for the vacancy for the Division of Tasmania.

In accordance with 77.4, the board elects the following Directors for a 2-year term:

David Vitale, Starward, VIC

David Withers, Archie Rose, NSW.

In accordance with clause 79, the Directors elected from among their number a President, a Vice President, a Secretary and a Treasurer. Each of them will hold office until the end of the next Annual General Meeting.

The Chief Executive conducted the process of filling the Officers of the board.

The role of Secretary and treasurer was combined.

The following positions were declared elected:

President: Holly Klintworth

Vice President: David Vitale

Secretary/Treasurer: Matt Hobson

Australia will miss out on the economic opportunity presented by its promising spirits manufacturing sector without urgent intervention by the Federal Government, the Inquiry Into Food and Beverage Manufacturing heard today in Canberra.

Peak industry bodies Spirits & Cocktails Australia and the Australian Distillers Association today appeared before the House of Representatives Standing Committee on Industry, Science and Resources at Parliament House.

Australian Distillers Association chief executive Paul McLeay said the Australian distilling industry should be integral to the government’s Future Made in Australia policy.

“However, the Government’s outdated policy settings and inaction has placed Australian-made spirits at a significant competitive disadvantage in our home market and abroad,” he said.

“Just as previous governments recognised the potential of Australian wine, with the right policy settings and infrastructure, Australian spirits can realise a $1 billion export opportunity by 2035.

“If we do not act now, Australian distillers will be outpaced by other emerging spirits markets in meeting growing consumer demand for premium products – and Australia will miss out on the economic windfall that could be ours.”

Spirits & Cocktails Australia director Nicole Lestal said the Government must release the handbrake that is the current excise regime.

“While Australian spirits account for 20% of alcohol consumption, it accounts for 50% of alcohol taxes,” she told the Committee.

“This structural disadvantage impedes innovation and opportunities to re-invest in Australian spirits manufacturing.

“Our global spirits industry experience tells us that when governments act decisively and across multiple fronts to provide coordinated support, it incentivises investment to achieve scale and unlock further opportunities for economic value-add and innovation.”

Quotes from witnesses appearing for Spirits & Cocktails Australia:

“Suntory Oceania’s new $400 million carbon neutral facility in Ipswich, Queensland, provides the Committee with a real time example of the positive impact that direct foreign investment can have on the Australian food and beverage manufacturing sector. However, there is little or no incentive for global spirit companies to invest in the expansion of the Australian spirits industry while our excise rates are so overwhelmingly uncompetitive with other countries like Japan, the United States, Ireland, Scotland and Mexico.”
Mark Hill – treasurer, Spirits & Cocktails Australia and managing director, Suntory Global Spirits Oceania

“After the UK Government froze excise in 2015, Brown-Forman invested approximately $500 million in acquiring three Scotch whisky distilleries. Nine successive freezes in the U.K. have provided certainty to further invest in expanding these businesses, tripling exports and significantly enhancing their tourism offerings as a result, among other economic benefits. Unfortunately, the current conditions and the uncertainty borne of Australia’s excise regime – which is the third highest spirits tax in the world – are inhibitors for global companies like ours making such an investment in this market.”
Kylie McPherson – member, Spirits & Cocktails Australia and vice president, director of public affairs Brown-Forman Australia

“New world whisky is currently on the rise in many corners of the world. Australia has an opportunity to grow our category into something of global significance synonymous with quality and innovation, following in the footsteps of Japanese and Scotch whisky, while contributing substantially to domestic employment and economic growth.”
Satya Sharma – director, Spirits & Cocktails Australia and chief executive officer, Lark Distilling Co.

Quotes from witnesses appearing for Australian Distillers Association:

“We know that nothing tastes like Australia. Australian spirits celebrate flavour and unique native ingredients that are not found anywhere else in the world. This provides Australia with a point of difference from other spirits-producing nations. That’s why our industry needs coordinated, targeted support to both succeed at home and take distinctive Australian spirits to the world.”
Holly Klintworth – president, Australian Distillers Association and managing director, Bass & Flinders Distillery

“My experience of living in the US for the last five years has shown that it is extremely difficult to build an export market for Australian spirits without the coordinated support that only Government can provide. When Starward shows up at prestigious international trade shows like ProWine, I blow my entire export marketing budget on a trestle table that gets lost in the acres of exhibitors, while Australian winemakers have pride of place in an elaborate pavilion, proudly showcasing their provenance. It’s unfortunate that when we ask Austrade for the same opportunities, we are informed that their support does not extend to spirits. The consumer demand is there, we just need Government to recognise the potential of our industry.”
David Vitale – vice president, Australian Distillers Association and founder, Starward Australian Whisky

The Spirits & Cocktails Australia and Australian Distillers Association submissions are available to download on the Inquiry website.