Cider tax sparks hot debate

By James Atkinson

Claims that flavoured cider variants are sidestepping the RTD tax have drawn fire from Swedish brand Rekorderlig, while the importer of traditional cider, Westons, has rubbished calls for the entire cider category to attract the RTD tax.
 
Media reports over the weekend claimed alcohol producers were targeting young drinkers with ciders that are subject to the more favourable Wine Equalisation Tax (WET) after the introduction of the RTD tax in 2008 put the dampener on sales of 'alcopops'.

But Rekorderlig importer Patrick Ale, of Red Island Marketing, told TheShout his company is already paying the RTD tax on its flavoured variants.

"We pay RTD tax for our flavoured cider, while our apple and pear variants fall under the WET," he said.

"In terms of strawberry and lime, which is one of our fruit ciders, we pay the highest amount of tax, which is the RTD tax."

"It's a pear cider base but it has natural fruit flavouring, so it falls outside the scope of the WET classification.

"I can't speak for other cider importers or producers, but that's what we do."

But the Distilled Spirits Industry Council (DSICA) is suspicious that there are other ciders on the market that are technically flavoured, but are being taxed as traditional ciders, according to chief executive Stephen Riden.

"If you look at the price of them it's hard to see how some of them can be paying the RTD tax, which is a much higher rate than the cider rate."

He said that in its pre-budget submission to Federal Treasurer Wayne Swan, DSICA has suggested that all cider should be taxed as RTDs "because that's the product category that they are competing with".

"They're substituting into where the premixed drinks are, the marketing looks very much like what was going on around alcopops, and that's what their direct competitor is," he said.

But Paul Wormley, managing director of Westons Cider importer World Brands Australia, warned against a blanket approach to the category, which also includes traditional ciders that are fermented using real apples.

"It's getting abused for sure – there are companies out there that are trying to jump into the RTD/alcopop market with the flavoured ciders, that goes without saying," he said.

"But I don't think you should punish the cider producers who stand by the traditional ways of making cider – why punish them?"

Red Island's Patrick Ale added that Rekorderlig is a premium product with a higher price point that is obviously not targeted at young people.

"For a young person to go to a bar and try and pay $15 a bottle is a substantial deterrent," he said.