The Independent Brewers Association (IBA) has put forth six proposals to the Federal Government that aim to provide greater support to the 600+ independent breweries in Australia.
The proposals have been issued in a week that has already seen two more breweries enter into voluntary administration along with further increases to beer’s tax excise rates.
“It is a very unhealthy situation for our industry at the moment,” said Richard Watkins, Chair of the IBA.
“Beer tax has jumped by nearly 8% in the past three to five years and local brewers can’t match the prices of overseas-owned producers.”
Hawkers entered into voluntary administration on Monday despite reporting consistent growth over recent years. Adelaide-based Big Shed has since followed suit, entering into voluntary administration today.
“While no-one ever wants to be in this situation, we know that it’s necessary for our staff and business,” said Co-Founder Craig Basford.
“We invested heavily in our business expansion up to December 2019 only for the world to shut down in March 2020. It is fighting that ongoing battle that has us where we are today.”
Big Shed and Hawkers are following on from what has become a worryingly established pattern, that first became apparent when Queensland’s Ballistic Beer Co was placed into administration in January 2023. Since then, Bad Shepherd, Dainton, and Wayward have all undergone the same fate, with Wayward successfully emerging from the process under existing management on the 24 of January of this year.
Interestingly, Dainton, Bad Shepherd, Ballistic, Wayward, Hawkers, and Big Shed all share various brand similarities, such as hitting the sub-$100 price point per case for many of their beers.
The first three IBA proposals seek to provide immediate relief to Australia’s independent brewing industry and include:
- Freezing indexation of alcohol excise for a period of two years.
- The excise remission cap of $350,000 that was introduced in July 2021, should be indexed in line with inflation.
- Extending terms for repayment of excise debts that were deferred during the covid years.
“Every time excise rates go up, my first thought is how many of our independent breweries are going to survive this round and who will close next,” said Kylie Lethbridge, CEO of the IBA.
The biggest issues are structural and economic and only the Federal Government can address them. The Federal Government needs to act now if it wants the sector to survive – and to show Australians they do care about local small businesses.”
Currently, the unequal alcohol taxation regime is making small breweries unviable. According to the IBA, tax excise accounts for approximately 45% of the overall cost of an IPA produced by an independent brewery. The beer tax excise means that beer drinkers pay double the tax per standard drink compared to bottled wine, or eight times the amount compared to cask wine.
“We face an unequal taxation regime that increasingly has beer being taxed at a higher rate than wine,” said Lethbridge.
“If excise is supposed to be a tool for harm minimisation – then the Federal Government really needs to take a look at its own data and create an equal playing field that meets its own policy objectives.
“We are simply asking for common-sense reforms that go some way to creating equity for small breweries in a market stacked against them.”
The spirits tax has increased at a similar rate to beer since 1980. Similarly to the IBA, the Australian Distillers Association has also called on changes to the government’s taxation of spirits.
“There are more than 600 spirits manufacturers affected by this archaic policy,” said Australian Distillers Association chief executive Paul McLeay.
“Our industry contributes $15.5 billion in added value to the Australian economy, supporting 5,700 spirits manufacturing jobs and a further 45,400 jobs in spirits wholesale, retail and hospitality.
“The Federal Government must act now to safeguard our industry’s future by temporarily freezing this unfair and damaging tax.”
As a direct consequence of the economic difficulties Australia’s independent brewing industry is currently facing, the IBA has announced it will cancel BrewCon 24 in order to focus on its advocacy and support projects.
“We are doing all we can to get relief for Australia’s indie brewers but with many of stakeholders facing the most challenging times in history, many just don’t have the discretionary spend available to attend the conference this year,” said Lethbridge.
