The price of a schooner or glass of wine is expected to rise for the second time in a year, putting pressure on Australian breweries “crippled” by a cost of living crisis.
The cost of alcohol is likely to rise on August 5 following the release of the ATO's twice-yearly Consumer Price Index which sets out the government's excise duty rates.
Sydney Brewery marketing manager Richard Feyn said the likely increase would be another blow to small-scale local breweries, many of which have already gone out of business.
“It's devastating for business and it's killer for consumers at a time when the market is tight and everybody's having financial problems,” Feyn said.
“Craft beer is much more expensive than regular beer. We have to raise prices because taxes are going up and the consumer doesn't want the price to go up.”
Despite two years of increases, Feyn said the brewery had largely decided not to raise prices from August 5 and “to sit tight because the market won't allow us to do it”.
“We will lose our (profit) margin and that is another reason why the small places are going under. Even worse, the cost of goods has gone up… so it's a double whammy,” Feyn said.
Papa N Dave's Brewing operations manager Joel Meaney said they too had decided to largely bear changes to the CPI and lamented that “people just don't have the money”.
“We've borne some of the cost of the tax increases, but obviously you can only do this for so long before you're going to start pushing customers,” Mr Meaney said.
“People are noticing the price increases across the board in the alcohol industry and linking that to just a general cost of living crisis, it makes it really difficult for us.”
Mr Meaney said about a third of the money made on their beer, whether wholesale or “a pint of beer over the bar”, went to tax but vowed to “not give up but give”.
Instead, he said the family-owned business of 13 years had rethought its approach, including live music at its venues, contract brewing and other beverages like kombucha.
Australia is widely considered to be one of the most expensive places in the world to buy beer and is the third most taxed country after Finland and Norway.
Both brewers said the CPI index affected both small-scale and conglomerate companies that were better able to bear the increased costs and had a larger share of taps.
Mr Meaney suggested that a differentiated tax system could be a solution because “a company like Asahi shouldn't have to pay the same amount of tax that we do”.
White Bay Brewery senior sales manager Jackson Davey said the consumer could benefit from healthy competition on tap between small and large-scale breweries.
“The problem is that the duopoly that we experience in Australia is such that although the collection of independent companies in the craft beer sector employs more people, the two biggest companies in the beer world control the huge amount of contractual tab space,” he said, referring to Carlton & United Breweries (CUB) and Lion.
Mr Davey said the allocation of craft beer on tap was “not a system that encourages the best outcome for consumers” and that local businesses better supported the economy.
Nonetheless, he was hopeful about the future of the Australian craft beer industry with White Bay Brewery being made the “official beer partner of the Sydney Swans”.
“It's incredibly challenging, but I guess it's not new but I think the circumstances in which it's being implemented now are completely new,” Davey said.
“This is completely uncharted territory, just blindly increasing exercise like this through a cost of living crisis … it's get creative or get lucky.”
