Here's why your beer and wine will soon cost more

Wednesday, 31 May 2023

The latest ‘beer tax’ increase is expected to cost beer drinkers an extra $28.9 million dollars a year.

Half the price of a 12-pack of beer will soon be made up of tax after the Government announced the second largest “beer tax” increase in 30 years.

Alcohol excise rates, which apply to domestically produced alcohol as well as duty on imported beer, wine and spirits, will increase by 6.6% on July 1.

The latest hike follows a record 6.9% increase in 2022 and is expected to cost consumers an extra $86 million a year, including $28.9m for beer drinkers alone.

Brewers Association of New Zealand executive director Dylan Firth said the increase could not come at a worse time for brewers and consumers.

Cassels & Sons Brewing head brewer Simon Bretherton speaks to Stuff about small brewing in New Zealand.

“What it means is that when you next buy a 12-pack of beer, 50% of the price will be made up of tax through excise and GST.

“Combined with the many other increasing costs brewers and beer sellers in the hospitality sector are facing, the price of a pint is fast becoming out of reach.”

With borders reopening and tourism rebuilding, New Zealand risked being seen as “the land of the unaffordable pint,” he said.

Firth said the system, which linked annual excise increases to the Consumer Price Index was flawed, especially at times of high inflation.

“We have always highlighted to Government that they have the discretion to not raise excise by CPI. This is built into legislation.”

When inflation averaged 2% to 3%, businesses could build or absorb the cost into pricing.

“But large increases we have seen in the past two years, totalling more than 13%, mean the cost jump for businesses, and ultimately consumers, prevents further investment, innovation and growth.”

Brewers Guild executive director Melanie Kees said other countries had identified the positive effect tax relief could have on small businesses.

“The UK Government froze excise tax increases several years ago. Now, with this coming to an end, they have announced almost 10% relief for keg beer sold through hospitality venues to offset inflation,” she said.

Australia also had a differential keg excise rate which was lower than the rate for packaged beer, and supported smaller breweries with an excise exemption on the first 500,000 litres of beer produced.

Brewers Guild chairperson Joseph Wood said the latest increase could be the final straw for some small breweries which had faced higher costs for carbon dioxide, wages and ingredients over the last year.

“These are dire times, especially for those small breweries. It's not so easy to say, just pass the costs on to the consumer, times are tough and many of us are a core part of our local communities, we look after each other.

“So where does that leave a small business owner? There will be some very tough decisions to make for business owners, a stressful time for sure.”