Taxing times, but cider's still apples
It's then you will probably realise just how "on trend" cider is at the moment and the sweet grip it has on male and female consumers.
Where once cider was relegated to the back of the fridge of bottle shops and drunk by a small brotherhood of fans, it now shares prime real estate at the front of liquor stores and at pubs sits comfortably on tap next to beer.
Dan Murphy's online store lists more than 90 cider styles and brands, restaurant wine lists are crowded out by wonderfully named local and imported ciders (Cheeky Rascal, Herrljunga, Dirty Granny etc) while the beverage has also become prominent on city and suburban billboards.
Cider, both the traditional style based on apple and pear, and the newer styles drenched in sweetener and flavourings, only accounts for about 2 per cent of the total alcoholic beverage market but is throwing off explosive growth.
Traditional ciders recently notched up an annual growth of 22 per cent, while sweetened ciders such as Rekorderlig and Kopparberg had growth of just under 300 per cent last year.
The shift of drinkers from beer and spirits to cider has been caused by changing tastes and new social trends, with the super-sweetened flavour profile of the more popular Swedish imports such as Rekorderlig winning over legions of fans.
But there is another force directing consumer tastes, one that is unseen by drinkers. Lurking in the shadows is the tax office and its complex, opaque and sometimes ludicrous tax system.
Through a hazy mix of history, political pressure and backroom deals, Australia beer, pre-mixed spirits and ciders have found themselves taxed at vastly different rates. This gives some industry participants a price advantage over others, either attracting drinkers with lower prices or losing customers to cheaper beverages.
The non-GST tax on a standard drink is 5¢ to 30¢ for beer, depending on strength, 8¢ for cask wine, 24¢ if that wine is in a bottle, and 95¢ for spirits, alcopops and flavoured cider.
The original design of the Howard government's tax reform package was for traditional cider to be taxed at the same rate as RTDs and flavoured ciders, that is 95¢. But following a deal that some people believe was done to keep apple and pear farmers happy traditional cider only attracted a tax rate of 23¢, in line with wine.
The distilled spirits industry, which makes RTDs and alcopops, argues traditional ciders are robbing its market on the back of the massive price advantage they enjoy.
The industry argues that in the minds of consumers, ciders and pre-mixed spirits are the same, contain the same level of alcohol and should be treated the same by the Tax Office. The distillers point to bottle-shop advertisements that spruik ciders next to RTDs.
Some in the spirits industry also blame brewers for pushing the federal government in 2008 to introduce the alcopops tax, which pumped up the tax rate by 70 per cent, knowing full well budget-conscious drinkers would rush to beer and cider. Many popular ciders are made by brewers.
Brewers and cider-makers fought back, saying the spirits industry's arguments are a cover for their real motive to use budget savings gained from higher cider taxes to fund the removal the 5 per cent customs duty on imported spirits and RTDs. Moreover, drinkers do see and treat each beverage category as different, they say, especially when it comes to comparing ciders and alcopops.
Meanwhile, three friends gathered at a bar drinking beer, cider and alcopops are all paying a different tax rate but still getting just as drunk - and will most likely have the same hangover the next day.
Frequently Asked Questions about this Article…
Cider's rise is being driven by changing tastes and social trends — especially the growth of very sweet, flavoured imports (think Rekorderlig and Kopparberg) — plus greater visibility in bars, restaurants and retail. For investors, the trend matters because fast consumer uptake can translate into stronger sales for cider-makers and brewers that sell cider, though it also interacts with tax policy that affects prices and market share.
Cider makes up roughly 2% of the total alcoholic beverage market in Australia. Growth has been strong: traditional apple/pear ciders recorded about 22% annual growth, while sweetened flavoured ciders grew at just under 300% in the last year referenced in the article.
Different beverage categories face very different excise rates per standard drink, which creates price advantages. The article cites non-GST tax rates roughly as: beer 5¢–30¢ (by strength), cask wine 8¢, bottled wine 24¢, spirits/alcopops/flavoured cider 95¢, while traditional cider was taxed at about 23¢ (in line with wine). Those lower rates for traditional cider can make it cheaper at retail and help attract budget-conscious drinkers.
According to the article, the Howard government’s tax reform originally would have taxed traditional cider the same as RTDs and flavoured cider (95¢), but a later deal resulted in traditional cider being taxed at about 23¢ — the same rate as wine. The article suggests the concession was linked to protecting apple and pear growers.
Distillers and the spirits industry argue traditional cider competes directly with RTDs and should face the same high tax; brewers and cider-makers counter that consumers treat the categories differently and accuse spirits players of lobbying for tax moves that would benefit their own sector. For investors, these disputes indicate taxation and regulation are potential risks that can shift competitive dynamics and margins across beverage companies.
Yes — the article notes the 2008 alcopops tax pushed that category's tax up about 70%, which helped drive budget-conscious drinkers toward beer and cider. That shift boosted brewers and cider-makers, some of whom produce popular ciders themselves.
You can see cider's popularity in multiple places: Dan Murphy’s lists more than 90 cider styles and brands, ciders are increasingly front-of-shelf in bottle shops, appear on restaurant wine lists, sit on tap alongside beer in pubs, and are featured on outdoor advertising and billboards — all signs of stronger retail and on-premise demand.
Keep an eye on consumer trends (sweet flavoured cider demand), retail distribution and marketing visibility, and — importantly — tax and regulatory developments. The article shows tax settings can create material price advantages and change market share between brewers, cider-makers and distillers, so policy shifts are a key risk/reward factor for investors in beverage companies.
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