Alcohol producers face double hit from imminent tax hike, glass price rises poised to put squeeze on drinkers

Australian booze producers are bracing themselves for a double whammy of “crippling” alcohol tax set to rise again next month and increasing glass bottle prices, with customers set to be slugged even more for a cold one.

Many distilleries, breweries and wineries have reportedly been hit by more than a 20 per cent price increase in glass bottles over the past two years.

Driving the increase are soaring electricity and power prices to make the bottles, as well as rising material and global shipping costs.

Glass manufacturers may also have to pay a fee to fund programs like Containers for Change.

Kate Sinfield, chief executive of Sin Gin Distillery, said it was inevitable customers would have to pay more for their alcohol.

While she has managed to dodge the rising cost of glass by turning to a different manufacturer that uses over 50 per cent recycled materials, she warned it would be another nail in the coffin for booze producers.

“But the bottle price is still negligible compared to the price of the tax that the consumer is paying when they are buying a bottle of booze,” Ms Sinfield said.

“The cost goes straight to the customer. (The alcohol excise) is absolutely crippling our industry, it’s just terrible.”

Australia’s alcohol tax is now the third highest in the world, with spirits currently subject to a $103.89 levy per litre of pure alcohol, while beer faces an excise of as much as $61.32 per litre.

Drinks with a higher alcoholic content will incur more tax, which is adjusted twice a year based on the consumer price index.

The excise has increased by more than 20 per cent since the start of the COVID-19 pandemic and another hike is due on February 3.

Brewers Association of Australia chief executive John Preston said just under half of the cost of a $55 slab of beer was tax. “It’s just making people rethink going out, we’ve heard about people paying $15 and upwards for a pint, that’s just not viable,” he said.

A spokesman for alcohol giant Lion — which is behind brands Little Creatures, James Squire, Emu Export, and markets international labels like Heineken and Guinness in Australia — said it faced an influx of rising prices like energy, labour, materials and ingredients.

But he said the twice-yearly tax hike was the company’s biggest headache.

“These twice-yearly tax increases are out of step with other major markets around the world, are damaging Australia’s pubs and clubs and are unfairly punishing responsible Australian beer drinkers,” he said.

The glass price and tax hikes come at a time when local businesses are already grappling with other cost pressures like energy, wage and even insurance, amid dampened consumer spending thanks to higher inflation and interest rates.

These persistent cost pressures have already forced Cameron Syme, founder of Limeburners Whisky and Giniversity Gin at Great Southern Distilling Company, to pass on a 10 per cent price hike to customers last year.

“Obviously that’s much less than 20 to 30 per cent increase in costs that we’re seeing ... it makes it much harder to actually make a profit to reinvest in staff and in the business itself,” he said.

Multiple craft breweries around the country have already succumbed to the impacts of huge taxes, rising expenses and cost-conscious customers.

Last July, ready-to-drink vodka maker Billson’s Beverages called in administrators with debts of up to $21.3 million. It was recently bought out by global soft drinks giant Coca Cola in December.