By Amy Looker
Cider Australia has said that a change to the way traditional apple and pear ciders are taxed would stop the booming local cider industry in its tracks, following calls from the Distilled Spirits Industry Council of Australia (DSICA) to tax all ciders at the same rate as RTDs.
Flavoured ciders, which contain added flavours or colouring, currently attract the same tax rate as RTDs, while traditional apple and pear ciders are taxed at the same rate as wine.
Under DSICA's proposal to the government, all cider, regardless of how it is made, would attract the same tax rate as RTDs, a move which Cider Australia's president, James Kendell, told TheShout would devastate Australian cider producers along with apple and pear growers.
"We wouldn't be able to survive. The impact on our business would see the tax rate, by most people's estimates, triple, and that would need to be passed onto the customer – we couldn't stay in business incurring that sort of cost increase," Kendell said.
"We're all a little nervous because cider in Australia is really just starting to take off and it isn't embedded in the Australian drinking repertoire like beer or wine. If there was a massive price spike at this stage of the industry's development the average Australian would just go back to drinking beer or wine."
Kendell said the proposed tax increase would also hit hard at the farm gate.
"Apple and pear growers around the country would also be negatively impacted because we are obviously big supporters of the growers due to our purchase of raw materials. Unfortunately, it would be mostly rural, agricultural areas of Australia that would be hardest hit."
In addition to the support of smaller cider producers and growers, Cider Australia also has the backing of Carlton & United Breweries (CUB) and Lion.
"There is a big difference between traditional cider and RTDs," said CUB's corporate affairs director, Jeremy Griffith.
"We are seeing growth in this emerging industry and the tax system should encourage and support local Australian cider producers and growers."
However, DSICA's Stephen Riden told TheShout that alcohol taxation should not be used as a form of industry protection.
"This is a case of special pleading, presenting itself as small cider growers when it actually has two multi-nationals standing behind it," Riden said.
For a long time retailers have been waiting for a new emerging category in Cider that is adding greatly needed profit back into the Liquor category. i.e. 35 to 40% GP. DSICA’s is willing to destroy Australian farmers that grow seasonal Apples and Pears. They are also willing to destroy emerging Cider companies that employ Australians in order to protect Multi Nationals (Non Australian) that send all their profits over seas. We as Australains need Farming and Manufacturing jobs to stay in Australia and we need help to establish the Cider market. This is nothing but an attempt for big overseas companies to grow back share in a declining volume and profit RTD category.
We really need to start looking at where the products are being produced, instead of simply the type category they fit into.
Considering most of the large companies are producing cider from Asian apple concentrate instead of real apples, they aren’t providing any jobs to Australian farmers. At the same time you have fantastic Australian Spirits trying to crack into the market, but that is made extremely difficult by the exorbitant tax spirits face.
Surely we need to start looking at what is locally owned/produced which ensures profits and jobs stay onshore, and will minimise large companies benefitting on a loop hole.