The latest Statistics New Zealand inflation figures will have many brewers and ultimately consumers gazing into their pint glasses this week as beer excise tax is set to increase by the highest level in over 30 years. In 2021 New Zealanders paid $1.22 billion in alcohol excise, set to increase to $1.3 billion for 2022. An increase of $28.3 million for beer alone.

“The beer excise increase could not come at a worse time for brewers and consumers, with the effects of COVID-19 still holding sway on the economy, the cost of living squarely in focus for New Zealanders and the hospitality sector far from being back to normal.” Said Brewers Association of New Zealand Executive Director Dylan Firth and Brewers Guild Executive Director Melanie Kees.

Brewers Guild Member and Co-Founder of Good George Brewing Brian Watson Said “we currently pay over $3.0 million in excise already, a 6.9% increase is the same as hiring 2-3 new staff members, a $204k increase on last year”

“At a time when New Zealanders are facing an economic crunch, the increase to beer tax is a hard one to swallow.” Said Firth and Kees

“One of the most important avenues for brewers is selling their product through bars and restaurants and the hospitality industry has suffered badly during the past 2 years and needs specific support. Yet here is the wider brewing and hospitality sector being hit with an extra $28.3 million tax.”

“Under the projected increase the excise tax would now be $83.08 per keg, $0.55 per bottle and $0.71 per Pint[1]. All before GST is added.”

“As a sector, increasing costs brought on by tax make operating in this economic environment tough. Large and small breweries are having to make difficult decisions about where to invest or where to pass on costs”

“In late 2021 our organisations jointly asked for additional Government support that could be delivered in an extremely targeted way via an immediate 50% reduction on excise tax for keg beer. This would have provided a short sharp cost reduction on tap beer supporting the hospitality sector and when passed on for the consumer too.”

“Again, we reaffirm our call for this action to be considered”

“A keg specific excise reduction such as this is targeted only to hospitality operators, as kegs are almost exclusively used by bars and restaurants. This also provides targeted support for small breweries who generally have higher ratios of product sold through kegs, as well as often through their own taprooms. What we are looking to target would be consistent with other peer markets such as Australia, which has a long-standing specific excise rates for keg beer and the UK which has for the last 2 years frozen excise tax completely and created a new specific keg rate.” Said Firth

“Government has shown with the petrol excise tax reduction, that is willing to use novel ideas to solve different cost of living problems. Over 160,000 New Zealanders are employed in the accommodation and food service industry, many of these being pubs and restaurants. With venues seeing huge decreases in trade since the COVID-19 outbreak a 50 per cent keg beer would reduce the tax payable on a pint of beer by around 35 cents.”

“The Brewers Association and Brewers Guild of New Zealand along with Hospitality New Zealand are calling on the Government to deliver beer tax relief to pubs, clubs and beer drinkers and other venues through a cut in keg beer tax. This will see a campaign launched next week asking for the Government to step in with sector specific support around reducing keg tax.”

[1] 5% ABV for a 330ml bottle, 425ml pint, 50L keg

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