The budget might be good for craft beer prices, but producers are sceptical

Sam ShelleyBruny Island Beer Co. head brewer Evan Hunter at the Tasmanian brewery.

Treasurer Scott Morrison is planning to make changes to Australia’s complicated alcohol taxation system targeting the beer and spirits sectors in next Tuesday’s federal budget, which he argues could see prices fall.

Morrison is pitching the changes as a win for craft brewers, but the main change benefits local brewers and distillers, with the 60% refund on excise duty, worth up to $30,000 annually, increasing to $100,000 from July 2019.

“Craft brewers and distillers will no longer pay additional tax, allowing them to compete on fairer terms with large beverage companies,” Morrison said.

That change is a big win for the country’s burgeoning boutique spirits industry, which now has more than 100 independent distillers producing whisky, vodka and gin.

A quirk which taxes beer kegs smaller than 48 litres at a higher rate will also be abolished to create parity.

“The concessional draught beer excise rates to kegs of 8 litres or more will level the playing field for craft brewers, which typically use smaller sized kegs, to distribute their beer to pubs, clubs and restaurants,” Morrison said in a statement.

“This not only champions the craft brewers that we’ve all grown to love, it raises a very tantalising prospect for Australians: the likelihood of cheaper craft beer.”

A 50-litre keg serves around 115 schooners of beer.

But one small brewer, Nick Haddow of Bruny Island Beer Co., believes the change to the cost of kegs will make little difference for craft brewers because a 50-litre keg — the ones rolled into pubs — is the industry standard.

“The government absolutely right to correct it, but it will affect very few brewers,” he said.

“Very few people use kegs smaller than 50 litres. We’re one of the smallest craft breweries you can find and we don’t use any. But the change may allow for growth in the small keg category.”

Haddow says the increase in the rebate to $100,000 was “great news, but it’s not just for craft brewers, it’s for the whole brewing industry”.

He’d like to see more done to help small business.

“It would be great to see some measures tailored specifically to the craft brewing industry that is mainly made up of small businesses, many in regional areas,” he said.

There are around 450 small, independent brewers in Australia, creating more than 2,400 jobs and the Treasurer says the changes “will drive competition in a sector currently dominated by large domestic and multinational brewers”.

Ben Kooyman, Chair of the Independent Brewers Association, welcomed the budget plans.

“This is great news for independent brewers, great news for consumers and great news for job creation,” he said.

“A reduction to the excise rate on smaller kegs has the potential to fundamentally change the way many of our members do business. It will allow them to win customers in smaller venues and in distant markets. And having to deal with full 50 litre kegs is one of the biggest workplace health and safety issues in many breweries. This will give brewers more options.”

Kooyman said the independent brewing industry has been lobbying for many years for a fairer deal on excise.

“I am very proud of what we have been able to achieve,” he said.

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