Vintage boss wants British alcohol tax fix

Australian Vintage boss Neil McGuigan has called for an overhaul of the way wine is taxed in Britain, Australia's largest wine export destination.

Australian Vintage boss Neil McGuigan has called for an overhaul of the way wine is taxed in Britain, Australia's largest wine export destination.

He said the billion-dollar export industry risked pushing people into ready-to-drink spirits if it could not produce a flavoursome wine with "guts" that was also only 5.5 per cent alcohol.

Mr McGuigan, a former manager of Rothbury Estate and production manager for Australian Vintage before taking on the chief executive role in 2010, said the company was working on a ground-breaking low-alcohol wine for the UK market to benefit from tax breaks on low-strength beverages and bolster the company's offshore earnings.

But he said he had also begun agitating in Britain for a lower-alcohol tax band between 5.5 per cent and 10 per cent that would deliver a full-bodied wine, generate tax revenue for government and also limit alcohol intake.

"We can make very, very good wine at 9 to 10 per cent alcohol [level], white and red, so what that does is actually help everyone," Mr McGuigan told BusinessDay.

"It ticks the box for the anti-alcohol people because we are introducing a product that is at a lower alcohol rate than normal traditionally [made] wine; we are helping the consumer because we are giving them a better beverage at a slightly higher level than 5.5 per cent, tick that box; and third, the government still gets a taxation benefit because we will be selling more of this good-quality wine at a lower tax rate."

Australian Vintage's wine brands include McGuigan, Nepenthe, Tempus Two and Yaldara.

In an attempt to tackle problem drinking and reduce alcohol-related health issues, the UK reduced tax on alcoholic beverages below 5.5 per cent. This benefited segments of the beer market - tailor-made for low-strength beer - but made it tougher for winemakers who typically struggle to create a flavoursome wine with such a low alcohol level.

Mr McGuigan said producing wine under 10 per cent alcohol was something the winemaker was good at, but just as importantly, it was a craft the Australian wine industry needed to perfect to keep consumers loyal to the beverage.

"There is a financial advantage for the consumer to buy the lower-alcohol wine, and we are answering a demand in the marketplace and specifically for the UK market.

"Because, what can we do if we don't get 5.5 per cent alcohol wine correct in a bottle? We might actually force people away from the wine sector."

He said Australian Vintage, formerly McGuigan Simeon and one of the few remaining pure-play winemakers listed on the ASX, had invested $2 million in machinery to create a 5.5 per cent alcohol wine that would also taste great.

"We think we will have the best low-alcohol wine on the market worldwide ... and will have that in the UK market in August."

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