Trends and taxes put fizz in cider sales
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.
Frequently Asked Questions about this Article…
Cider sales are booming because consumer tastes and social trends are shifting away from beer and spirits toward sweeter, flavoured drinks. Cider has moved from the back of bottle shops to prime shelf space and taps at pubs, and flavoured varieties appeal to a broad mix of male and female drinkers.
Cider still represents only about 2% of the overall alcoholic beverage market, but it's growing fast: traditional ciders recently recorded around 22% annual growth, while flavoured ciders (examples include Rekorderlig and Kopparberg) grew just under 300% last year.
Traditional cider is the classic apple and pear style, while flavoured ciders are often drenched in sweeteners and flavourings. The two categories appeal to different consumers and have been taxed and marketed differently, with flavoured ciders driving the biggest recent growth.
Australia’s complex alcohol tax system creates big price differences between products. Non‑GST tax per standard unit ranges from about 5¢–30¢ for beer (by strength), 8¢ for cask wine, up to 24¢ for bottled wine, and about 95¢ for spirits, alcopops and flavoured cider. Traditional cider has been taxed at 23¢ per unit, giving it a price advantage that helps boost sales.
Although tax reform originally aimed to tax traditional cider the same as RTDs and flavoured ciders, a deal — reportedly to protect apple growers — left traditional cider taxed at 23¢ per standard unit (in line with wine) instead of the much higher rate applied to spirits, alcopops and flavoured cider.
The distilled spirits industry argues that ciders and pre‑mixed spirits are similar in alcohol content and consumer positioning and should face the same tax treatment. They say traditional cider’s lower tax gives it an unfair price advantage and points to bottle‑shop ads that promote ciders alongside RTDs as evidence.
A 2008 alcopop tax pushed up the tax rate on alcopops by about 70%, which industry observers say drove budget‑conscious drinkers toward beer and ciders. That shift, together with category placement and new flavours, has helped cider sales accelerate.
Keep an eye on consumer taste trends (especially demand for flavoured cider), shelf and on‑tap placement, and importantly alcohol tax policy — any changes to tax rates or classifications can materially affect pricing, competitive advantages and growth prospects for cider producers and adjacent beverage companies.
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