Sunday, April 17, 2005

Don’t Blame The Brewers

Hear ye, here ye, the final round bell has rung for full strength beer. The hulky Aussie icon lager of 4.9% A/V is weakened and buckling at the knees like a punch drunk heavyweight boxer. Draught beer has been forced to reduce its weight a ‘teardrop’ at a time, according to David Park, Manager of Marketing Communications for Carlton & United Breweries, against a bruising bully who fixes his fights, the ‘wowser tax’. Rather than setting the scales evenly, as was the case under the old sales tax of 37%, the GST driven excise tax is indexed twice a year adding up to a permanent inflation rate of 10% per year for a beer over the bar.

But as the Aussie brewer staggers back to his corner, he’s greeted by a hostile crowd sniping at him with ‘value for money’ taunts. If ever the brewing industry needed support from its grassroots audience its now, yet they shuffle out of the arena in search of drinks that offer more bang for their buck. When the budget conscious drinker looks at the statistics, they find that a standard glass of cask wine is taxed nine cents whilst beer gets walloped at forty-two cents per glass. As for value added incentive that glass of cask wine is over double the alcohol but only about twenty cents dearer than the trusty ten-ounce pot. Yet still the crowd remains silent as our cultural heritage is watered down.

So what went did wrong for the Champ? To answer that we need to go back to the late seventies to an Australian invention, the four-litre wine cask and a Labour Federal government hell bent on lifting the profile of wine. The fledgling wine industry desired and got preferential treatment to develop an export market, and increase the amount of vineyards that concentrated on low quality high volume grape varieties. The state governments chipped in to provide excise concessions to assist small wineries, while their counterparts producing beer received tax relief only if they produced less than 300,000 litres per year.

With the new millennium brought a new Liberal Federal Government and a new taw tax structure, the GST. The antiquated wholesale sales tax of 37% across the board was replaced by an excise and customs duty tax system and the new WET (Wine Equalisation Tax) for grape, fruit, and vegetable wines plus vermouth, marsala, cider, and sake. WET maintains a 29% rate on the wholesale price of wine and the state governments provide a 15% wholesale price rebate for cellar door sales. In addition, the commonwealth provides a further 14% rebate of up to $ 300,000 wholesale sales to assist small wineries. Small breweries, on the other hand, continue to only be offered tax subsidies of production levels less than 3,000.000 litres per year. According to local small brewery Mountain Goat Beer, they produce that amount in six weeks.

But it’s in the local pub and bottle shop where the changing drinking habits and ‘bang for your buck’ philosophy is most apparent. Once the centre of Australian tradition, quaffing a few quiet ales with your mates, is no more. Draught beer sales now only account for 20% of total beer sales. As for value, a four-litre cask of wine contains approximately the same amount of alcohol as a 9-litre carton of beer, yet many of these casks retail for less than a six pack of full strength beer. When you compare the alcohol levels in cask wine and bottled beer from the bottle shop, the tax imposed per standard drink on cask wine is 16% compared to full strength beer taxed at 37%. Quite simply, a slab of full strength beer (33.6 standard drinks at 4.9% ABV) compared to a cask of wine (34.7 standard drinks at 11% ABV) is taxed six times more In terms of your wallet, that glass of cask wine at the pub should be costing the consumer around $ 7.00, but then nobody would purchase it would they.

Alan Giles, Victorian President of the AHA, sums it up well when he states “The government has milked the beer cow for years making the price of beer out of reach for many drinkers. Every time we get slugged with an increased excise indexation, the pubs see a drop off of 10% in draught beer sales. Without draught beer sales the local pubs cannot survive and another working man’s environment is lost, particularly in rural communities.”

Last year in an effort to inform the public and raise concern to these issues, the Australian breweries pooled together close to seven million dollars with their “It’s Your Shout” campaign. Their efforts went unrewarded by the public, and even fewer worries for the tax driven coalition who expected the blasé attitude of the boozers. So don’t blame the brewer or the publican, and cry into your chardonnay as we lose our cultural heritage. The fault lies with the beer drinking public who need to voice their protests with federal representatives to create a fairer drink tax for all rather than being forced to live in a wowser driven society.