Craft Brewers Struggle with Increasing Beer Taxes

Paying $20 (US$13) in tax on a slab of beer would leave a bitter taste in anyone’s mouth, let alone those who brew the amber fluid.

The federal government’s alcohol excise increases again on Aug. 5, meaning drinkers will pay $20 beer tax for a carton of full-strength and extra for a round at the pub.

Australia has overtaken Japan to have the third highest beer tax in the world behind only Norway and Finland, the brewing industry claims.

At a time when Australians are already struggling with the cost of living, the impost adds to pressures forcing many smaller breweries to close and others to call in administrators.

Among the latest breweries troubled is Billson’s in Victoria’s northeast, which recently announced it had entered voluntary administration.

Numerous other smaller breweries have called time on their businesses, and it’s not just the small end of town facing difficulty.

Beverage multinational Lion announced in June it would move some production of its James Boag line from Tasmania to the mainland.

It had been a tough time for both large and small brewers, Lion Australia managing director James Brindley said at the time, with continual federal taxes increases partly to blame for declining beer sales and production volumes.

Yet doom and gloom does not prevail across the whole industry, with some breweries such as Melbourne’s Moon Dog bucking the trend.

“Moon Dog is an established business that has grown over a period of 14 years,” co-founder Karl van Buuren told AAP, from a small backstreet operation to a bigger brewery as well as two suburban venues.

“We’ve found that expanding our beverage offering beyond beer, and opening fun and experiential venues in key markets has allowed to keep ahead of a changing and challenging time.”

Steve Jeffares, co-founder of the similarly successful Stomping Ground brewery in Collingwood, says survival means focusing on home markets.

“There is not much growth to be had currently, and many have experienced sales declines, but I expect all are trying to operate as leanly as possible,” he told AAP.

These days most breweries have a hospitality offering and they should be OK if it resonates with people watching their pennies but still craving social connection, Jeffares said.

The biggest challenge across the country is managing the rising costs of operating a brewery and hospitality venues, with the decline in consumer demand for craft beer caused by high inflation and a string of interest rate rises, he said.

Some breweries are also contending with payment plans for tax debt deferred during the pandemic, plus the twice-yearly increase in beer excise.

The tax hikes are getting out of control, Brewers Association chief executive John Preston said.

“They are just hurting beer drinkers and our pubs and clubs,” he said.