Spike in beer, wine tax might power Hawke’s Bay corporations to up costs

Chris Barber from Zeelandt Brewery, near Napier, says the increase is a concern. Photo / Paul Taylor

An increase in alcohol tax from July 1 will cost beer brewers about $6 extra per keg which may result in Hawke’s Bay breweries being forced to up their prices.

A local brewer says it is not only alcohol tax that is going up but “everything” else is also costing more, and putting pressure on manufacturers to increase beer prices.

Excise tax on alcohol rises each year on July 1, based on the inflation rate, and is aimed at deterring people from binge drinking and reducing alcohol harm.

It is one of two main taxes on alcohol (the other being GST).

Currently, excise tax equates to roughly $77 for a 50L keg of beer, and is paid by the brewer.

That will rise to roughly $83 on July 1, an increase of $6 per keg.

While that sounds relatively modest, even small breweries can make 50,000L of beer in a year which equates to $6000 extra in excise tax, while bigger brewers will have far bigger bills.

Winemakers will also be stung by the rise, but the average tax increase for a bottle of wine will vary depending on alcohol content.

The alcohol tax spike is particularly high this year because the inflation rate has jumped 6.9 per cent in the space of a year, the highest increase in more than three decades.

The Brewers Association of NZ has now called for excise tax on keg beer to be reduced by half, rather than increased, to help manufacturers.

Calls have been made to slash the price of excise tax on keg beer. Photo / NZME

“Increasing costs brought on by tax make operating in this economic environment tough,” Brewers Association of NZ executive director Dylan Firth said.

“Large and small breweries are having to make difficult decisions about where to invest or where to pass on costs.”

Zeelandt Brewery in Eskdale, near Napier, head brewer and managing director Chris Barber said it was a concern alcohol tax was going up by a large amount.

“This year being quite a big jump we will be having a look at our pricing,” he said.

“And it is not just excise tax, everything has gone up – power, bottles, transport, raw materials.

“Absolutely everything has gone up so we will have to reflect that in the pricing otherwise you are selling your beer for less profit.”

He said a new garden bar next to their brewery had been helping business, which was opened just before Christmas and was proving popular.

It showcases Zeelandt’s beers and neighbouring Petane Wines’ products.

He said a reduction in keg beer tax would help them a lot, as about half of their beer was in kegs and supplied to hospitality venues including their own.

He said it was less harmful drinking out than at home and should incur less taxes.

“I think drinking socially with people is more of a healthier way to drink rather than buying packs of cheap beer and sitting at home (drinking).”