In November, Australian Distillers President, Holly Klintworth, and Treasurer/Secretary, Stephen Parry met with the Chair of Spirits & Cocktails Australia, to discuss the MOU between the two associations.

Both parties agreed the document is fit-for-purpose but that enhancements could be made to better describe appropriate behaviour and conduct between the parties when embarking on joint activities. The Chief Executive of Australian Distillers and Spirits & Cocktails Australia will prepare a draft annexure to the agreement for approval at the first meeting of each Board in 2024.

Alcohol Beverage Australia held their Annual General Meeting and Council Meeting. The Chief Executive of ABA confirmed that the current Board had been elected at the previous AGM for a period of two years. A presentation was given by the Sydney University PhD candidate, who provided an update on the progress of his research, which is being funded by ABA. Members committed to assisting him with data and review, as needed.

ABA members engaged with the Assistant Minister for Health, Hon. Ged Kearney MP, in response to a media comment regarding possible exploration of cancer warning labels for alcohol beverages. The Minister for Health, Mark Butler MP, has subsequently publicly stated the Government has no intention of pursuing cancer warning labelling.

Digital Best Practice Guide

Approval of a new Digital Best Practice Guide, developed in consultation with a working group of Code signatories was approved by the ABAC board. The Code will now be shared with the Minister for Health by the Department of Health representative on the Management Committee. It is anticipated the Guide will be publicly released in late January 2024.

Hard Solo

The Chief Adjudicator also provided a thorough analysis of the Adjudication Panel’s recent determination on Hard Solo, noting the decision had been well received by media and stakeholders. Concerns from Code signatories regarding Asahi’s conduct in the transition period permitted under the ABAC Rules were raised and the Chief Executive committed to including transition arrangements to the issues paper for consideration by the consultant undertaking the Governance and Operations Review. The determination was circulated to all members of the ADA board the day it was handed down.

Wet Pussy

The Victorian Liquor Commission issued a banning notice for Wet Pussy Shot - refer here.

On 8 September 2021 Ad Standards considered an ad for the product and found it in breach of the AANA Code of Ethics. On 6 December 2021 ABAC made a final determination that the name and packaging of this product was in breach of ABAC standards (sexual success and appeal to minors). The Company did not respond to the final determination and so in accordance with ABAC’s Rules & Procedures, ABAC referred the complainant’s concerns to the Victorian Liquor Commission that month.

There was a considerable delay in the Commission considering this matter (despite regular enquiry from us), partly as the Commission was entirely restructured in 2022.

The Commission has agreed with the findings of both ABAC and Ad Standards and found that advertising and promotion of the Product is indirectly sexual or sexist and therefore is not in the public interest. The ban includes using this name on its labels and on any website used to promote the product.

Deloitte Access Economics was engaged in September by SCA to update the Australian spirits industry’s economic contribution analysis. This study will be a valuable input into submissions and advocacy in support of a Parliamentary Inquiry, and in our continued pursuit of spirits excise reform.

A survey to members of ADA and SCA was co-designed by staff and consultants at Deloitte, with the support and cooperation of the SCA Corporate Affairs Committee and a couple of ADA members. The survey will provide comprehensive insights into spirits production in Australia, employment, value-add to industries throughout our supply chain, and exports. The survey has also been enhanced to better understand the impact of excise on members of each association, availability and access to capital, while also providing insight into business confidence. This information will complement desktop research and analysis completed by Deloitte Access Economics to provide a holistic view of the industry’s economic contribution.

Thank you to everyone who participated in this survey. We know it was challenging and required significant time from your business to complete the data. By taking the time, and effort, you have made a valuable contribution to the industry.

Last month the UK Government announced a freeze on all alcohol duty until at least August next year. ADA and SCA wrote to the Treasurer advising him of the developments and pointing him to the implications for the Australian industry. We said there are clear parallels with the situation our businesses are currently confronting in Australia. Spirits excise in Australia has risen by a total of 12.5% in under two years, from $88.91 to $100.05 per litre of alcohol. We asked him to intervene by freezing CPI increases on spirits for the remainder of this Parliament, to take effect before the next CPI increase in February.

The Victorian Government has announced the Safety - Hazardous Areas and Dangerous Goods Rebate has now opened for all Victorian distilleries. This program will provide a rebate of up to $50,000 for expenditure on eligible safety infrastructure improvements to your distillery.

Key features of this program include:

Access to the Rebate, including program guidelines is available via the link below.

Access Rebate Website

The Mid-Year Economic and Fiscal Outlook (MYEFO) confirms Australia’s spirits excise regime is untenable and must be urgently reformed, the spirits industry warns.

The MYEFO reveals a projected $170 million shortfall in revenue from spirits excise in 2023-24 alone, as the combination of high spirits excise and inflation continues to dampen consumer demand.

Spirits and Cocktails Australia chief executive Greg Holland says the budget update confirms the pain that is currently being felt among spirits manufacturers.

“Declining spirits sales are now being reflected in the Federal Government’s tax coffers,” he said.

“This lower tax revenue is despite spirits excise having recently hit at an all-time high of $100.05 per litre of alcohol.”

Holland said the Budget update suggests the tax has reached a tipping point similar to that experienced in the UK, where spirits sales fell by 20 per cent immediately following an unprecedented 10.1% duty rise in August.

The UK government found the tax increase contributed to the largest rise in UK inflation ever recorded and lower tax revenue.

“With another excise increase for the Australian spirits industry due in February, we call on the Federal Government to follow the UK’s lead and better align alcohol taxation to the current economic conditions,” he said.

“The rate of spirits excise has increased, yet revenue is down. This tells us everything we need to know about the appropriateness of this tax in the current economic climate.”

Australian Distillers Association chief executive Paul McLeay said the rampant excise increases are putting the emerging local industry at risk.

“We now have more than 600 distilleries operating in all corners of Australia, the majority of which are in regional areas, contributing 5,000 manufacturing jobs to the Australian economy,” he said.

“Spirits excise in Australia has risen by a total of 12.5% in under two years, fuelling inflation and cost of living pressures on hard working Australians.

“As consumption is falling our spirits producers are also being hit with higher costs of production, and now they are facing another excise hike in February.

“We call on the Government to ease the pressure on the Australian industry by freezing spirits excise.”

The UK Government’s decision to temporarily freeze alcohol duty is instructive for policymakers in Australia, according to the Australian spirits industry.

UK Chancellor of the Exchequer Jeremy Hunt on Wednesday announced a freeze on all alcohol duty until at least August next year, in recognition that further increases would mean less tax revenue for Treasury.

Spirits & Cocktails Australia director Nicole Lestal said the UK experience demonstrates that alcohol tax must keep pace with changing economic circumstances and industry dynamics.

“Spirits sales in the UK fell by 20 per cent immediately following the unprecedented 10.1% August duty rise, crippling the distilling industry and putting a dent in the government’s coffers,” she said.

“The UK’s Office for National Statistics found the most recent tax increase contributed to the largest rise in UK inflation ever recorded.”

Lestal said spirits excise in Australia, which increases twice per year, has risen by a total of 12.5% in under two years, from $88.91 to $100.05 per litre of alcohol, fuelling inflation and cost of living pressures.

“Alcohol beverages on their own accounted for 5.03% of total CPI composition in the September quarter this year,” she said.

Australian Distillers Association chief executive Paul McLeay said spirits tax has increased more than 70 times since the current excise regime was introduced in 1983, back when there were only two spirits manufacturers in Australia.

“There are now more than 600 businesses subject to this tax, which is no longer fit for purpose,” said McLeay.

“With another excise increase for the Australian spirits industry due in February, we call on the Federal Government to follow the UK’s lead and ease the pressure on Australians by freezing spirits excise.”

If you are the ADA primary contact, you would have received an email from Deloitte Access Economics inviting you to complete a survey about your business.

This work has been commissioned by Spirits & Cocktails Australia with the support of Australian Distillers Association, to provide an updated picture of the industry’s current economic contribution and potential for growth.

The survey includes up to 50 questions relating to your finances and operating model; manufacturing production, distribution and sales; workforce demographics and more.

I apologise in advance for adding to your workload at a busy time of year for our industry.

However, I must emphasise that your participation in this research is absolutely critical to ensure we have robust and credible data to underpin our advocacy and engagement with government and stakeholders.

I want to stress that only aggregated responses will be reported in the final research. Your individual responses will not be made available to Spirits & Cocktails Australia, the Australian Distillers Association, or any other party.

Deloitte Access Economics is contractually obliged to treat your survey responses with the utmost confidentiality. They will be destroyed once the project has been completed.

I’m sure you will agree that the stakes have never been higher for our advocacy efforts with spirits excise having recently surpassed $100/LaL

To help motivate you further, Spirits & Cocktails Australia has donated some fantastic incentives to participate in this research:

• 1st Prize – five tickets to the 2024 Australian Distillers Annual Conference and a $5,000 travel voucher

• 2nd Prize – two conference tickets and a $2,000 travel voucher

• 3rd Prize – One bottle of the Australian Distillers Association’s extremely rare ‘Collaborative Blend’, celebrating 30 years of Australian Whisky.

The survey is divided into core questions and supplementary questions. You will need to complete the entire survey to be entered into the draw to win these prizes*.

Please note that Deloitte Access Economics will only be sending the survey to the Primary Contact in the Australian Distillers Association’s member database.

If that is not you, please ensure you remind them to complete the survey by COB, 1 December so that your company is entered into the draw.

Thanks for your participation in this important project. Please contact Michael Sugg with any enquiries on 0481 177 160 or email.

Regards,

Paul McLeay
Chief Executive

* See full prize draw terms and conditions.

Producers are responsible for ensuring the quality, safety and regulatory compliance of their products. In order to fulfil this role appropriately and effectively, producers must have the ability to trace their products in order to react quickly and effectively should any consumer safety issue arise.

Producers often use an identification number or mark – otherwise known as a lot code – as part of their traceability strategy, in order to quickly and efficiently identify the lot (ie, batch of sales units of a foodstuff produced, manufactured or packaged under practically the same conditions) from which a product was part. Lot codes will typically include information such as the line of production, batch number and the bottle reference. The production date can also be part of the lot code, either in a detailed (e.g. 2023.02.03) or in a coded fashion, depending on the operator. All these elements will allow producers to conduct a swift and thorough recall of affected products should any issues arise. Lot codes are also used by operators for protection against counterfeiting, considering that they are unique to a given product.

Australia and New Zealand

Legislative framework

In both Australia and New Zealand, the Food Standards Code mandates that food for sale must bear a lot identification.

Moreover, there is a prohibition on defacement: “A person who sells a food for sale that is packaged, or deals with a packaged food for sale before its sale, must not deface the label on the package unless:

(a) the relevant authority has given its permission; and

(b) if the relevant authority has imposed any conditions on its permission—those conditions have been complied with.”

There is a specific provision to permit instances where there would be a need to re-label or oversticker in order to be compliant with the Code.

Penalties in case of infringement of the rules

Australia: According to the Food Act 1984, “a person must not sell or advertise any food that is packaged or labelled in a manner that contravenes a provision of the Food Standards Code. Penalty: AUD$40 000 in the case of an individual and $200 000 in the case of a corporation”, and “a person must not sell or advertise for sale any food in a manner that contravenes a provision of the Food Standards Code. Penalty: $40 000 in the case of an individual and $200 000 in the case of a corporation”.

If you would like a toolkit for lot code and traceability requirements for export requirements, please contact Paul McLeay.