Trends and taxes put fizz in cider sales

THE next time you are at a barbecue or enjoying a drink after work at a bar , do a quick inventory of what people around you are drinking.

THE next time you are at a barbecue or enjoying a drink after work at a bar , do a quick inventory of what people around you are drinking.

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 in bottleshops and drunk by a small brotherhood of fans, it now shares prime real estate at the front of stores and sits comfortably on tap next to beer at pubs.

Cider, the traditional apple and pear style and newer styles drenched in sweetener and flavourings, only accounts for about 2 per cent of the alcoholic beverage market but is ringing up explosive growth.

Traditional ciders recently notched up annual growth of 22 per cent, while flavoured 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. But there is another force directing consumer tastes.

Lurking in the shadows is the Tax Office and its complex and sometimes downright ludicrous system.

Through a hazy mix of history, political pressure and backroom deals, beer, pre-mixed spirits and ciders have found themselves taxed at vastly different rates. This gives some industry participants a price advantage over others.

The non-GST tax on a standard unit is between 5¢ and 30¢ for beer, depending on strength, 8¢ for cask wine, as much as 24¢ if that wine is in a bottle, and at the top of the pile 95¢ for spirits, alcopops and flavoured cider.

The 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. But following a deal that some believe was done to keep apple 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.

It argues that in the minds of consumers, ciders and pre-mixed spirits are much the same, contain the same level of alcohol and should be treated the same by the Tax Office. Backing up their case, they point to bottleshop ads that spruik ciders next to RTDs.

Some within the spirits industry also blame brewers for pushing the government in 2008 to introduce the alcopop tax, which pumped up the tax rate by 70 per cent, knowing full well budget-conscious drinkers would rush to beer and ciders.

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