The price of a sailing ship or a glass of wine is set to rise for the second time in a year, putting pressure on Australian breweries “crippled” by the cost of living crisis.
Alcohol prices are likely to rise on August 5 after the release of the Australian Taxation Office’s twice-yearly Consumer Price Index, which sets government tax rates.
Sydney Brewery marketing manager Richard Finn said the potential increase would be another blow to small local breweries, many of which have already closed.
“This is disruptive to business and poses a significant risk to consumers at a time when the market is tight and everyone is struggling financially,” Mr. Finn said.
“Craft beer is much more expensive than regular beer. We need to raise prices because taxes are going up and the consumer doesn’t want the price to go up.”
Despite the semi-annual increases, Mr Finn said the brewery had largely decided not to raise prices from August 5 and to “wait quietly because the market doesn’t allow us to do so.”
“We’re going to lose profit margin, which is another reason why small restaurants are going to go under,” Finn said. “And what’s worse is that the cost of goods has gone up… so it’s a double whammy.”
Dad N Dave’s Brewing Company COO Joel Meaney said they also decided to make major changes to the consumer price index, lamenting that “people don’t have the money.”
“We’ve borne some of the cost of the tax increases, but obviously you can only do that for a limited time before you start squeezing customers,” Meaney said.
“People are noticing rising prices across the board in the alcohol industry, and combined with the general cost of living crisis it makes it very difficult for us.”
About a third of the money the company makes from selling beer, whether wholesale or “a glass of beer on the bar,” goes to taxes, Meaney said, but he vowed “not to give up without a price.”
Instead, he said, the 13-year-old family-owned business has rethought its approach, including live music at its venues, contract brewing of beer and other beverages like kombucha.
Australia is widely considered one of the most expensive places in the world to buy beer, and is the third most taxed country after Finland and Norway.
The companies said the CPI impacted smaller and more conglomerate companies, which were better able to afford the increase and had a larger share of taps.
Mr. Minnie suggested that a graduated tax system might be the solution because “a company like Asahi shouldn’t be required to pay the same amount of taxes as we do.”
Consumers will benefit from healthy competition between small and large breweries, said Jackson Davey, senior sales manager at White Bay Brewery.
“The problem is that the duopoly we see in Australia is that even though the independent craft beer group employs more people, the two biggest beer companies control a huge amount of contract tab space,” he said, referring to Carlton & United Breweries (CUB) and Lion.
Mr Davey said that setting aside craft beer on tap was “not a system that encourages the best outcomes for consumers” and that local businesses were better suited to support the economy.
However, he expressed optimism about the future of the Australian craft beer industry after White Bay Brewery became the “official beer partner of the Sydney Swans”.
“It’s very difficult, but I think it’s not new, but I think the circumstances in which it’s being implemented now are completely new,” Davey said.
“It’s completely uncharted territory, just a random increase in exercise like this because of the cost of living crisis… You either get creative or you get lucky.”
