Cider industry fears new tax will destroy it
Supported by Foster's, which is the largest producer of cider in Australia and has brands such as Bulmers and Strongbow, Cider Australia has written to all members of Parliament in the lead-up to the budget, arguing a new tax proposal by the spirits industry to tax cider at the same level as pre-mixed spirits would destroy an industry that is creating jobs in agriculture and manufacturing.
A spokesman for Cider Australia labelled a budget proposal paper produced by the Distilled Spirits Industry Council of Australia, which, in part, calls for a tax increase on cider, as "misleading, disingenuous and deceptive".
"Cider Australia has significant concerns in relation to the push for change to cider taxation, which is being heavily lobbied by the DSICA," a letter to all MPs reads.
"[The DSICA] is made up almost exclusively of multinational companies who rely on primary industry in their home countries but are lobbying the Australian government to impose a killer tax on the Australian cider industry.
"The DSICA lobby paper is purposefully misleading and deceptive in its 'reform of cider taxation'."
The DSICA, which represents big liquor companies such as Diageo, Bacardi and Remy Cointreau, proposes a rationalised system based on a volumetric tax across all alcohol products.
The distilled spirits industry has argued traditional ciders are robbing its market because of the massive price advantage they enjoy. It argues that, to consumers, ciders and pre-mixed spirits are the same, contain the same level of alcohol and should therefore be treated the same by the Tax Office.
Its budget submission would make traditional cider, currently under the Wine Equalisation Tax system, have its tax rate lifted from roughly 23¢ per standard drink to the level paid by ready-to-drink spirits, which is about 95¢ tax per drink.
The DSICA believes this would raise $496 million in additional revenue over the forward estimates.
Cider Australia is calling for no overall increase in total revenue from the cider sector as well as a reform of the WET rebate to remove unintended recipients and alleviate unintended consequences of the system that are distorting supply decisions.
"Cider Australia proposes that if any changes are made to the current WET scheme, then Australian-produced cider should be taxed in line with Australian produced wine," the letter says.
"This is the logical position for an industry that mirrors the wine industry from growers, producers and manufacturers through to sales and distribution.
"All Australian apple and pear growers and cider producers are calling on your support to reject the lobbying by the DSICA and to support the growing Australian cider industry and its local benefiters, the Australian orcharding communities and families across the nation."
Foster's is also lobbying hard.
"We are concerned that the imported spirits industry is again aggressively lobbying for reform to the taxation of traditional ciders," a Foster's government relations manager said in a letter to Cider Australia.
"The arguments raised ... fail to reflect the current situation relating to traditional cider and ignore the devastating impact an excise change would have on the traditional cider industry, as well as apple and pear producers.
"If traditional cider was moved from the WET regime into the spirits, the tax rate would increase by over 140 per cent.
"It would have an immediate impact upon the Australian cider industry and local apple and pear growers.
"It is estimated sales would decline by up to 30 per cent."
Frequently Asked Questions about this Article…
The Distilled Spirits Industry Council of Australia (DSICA) is proposing a move to a volumetric excise system that would tax traditional cider at the same level as ready‑to‑drink pre‑mixed spirits, substantially raising the tax rate applied to cider.
The spirits industry, organised under the DSICA, is lobbying for the change. The DSICA represents large liquor firms including Diageo, Bacardi and Remy Cointreau, according to the article.
Cider Australia — a coalition of growers, producers and manufacturers — supported by Foster's (maker of Bulmers and Strongbow) is opposing the proposal. They say it would 'destroy' the Australian cider industry, harm apple and pear growers, cost jobs in agriculture and manufacturing, and that the DSICA lobbying paper is misleading.
The article states the proposal would lift traditional cider taxation from roughly 23 cents per standard drink under the Wine Equalisation Tax (WET) system to about 95 cents per standard drink — a large increase described in the article as more than a 140% rise and effectively a quadrupling in tax on a glass of cider.
The DSICA estimates the proposed tax re‑classification of cider would raise about $496 million in additional revenue over the forward estimates.
Cider Australia is calling for no overall increase in total revenue from the cider sector, reform of the WET rebate to remove unintended recipients and distortions, and that Australian‑produced cider—if changed—should be taxed on the same basis as Australian‑produced wine.
Foster's warns the tax change could have a devastating impact: it says sales of traditional cider could fall by up to 30% and that any move out of the WET regime would immediately hurt the Australian cider industry and local apple and pear growers.
Investors should monitor government budget announcements and parliamentary responses to lobbying, DSICA and Cider Australia communications, any WET reform proposals, and company statements (for example from Foster's and DSICA‑represented firms). Policy changes could affect revenues, domestic supply chains, and growers linked to the cider sector.
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