As another craft brewery – Hawkers Beer – enters voluntary administration, the Independent Brewers Association (IBA) has ramped up pressure on the government to freeze excise indexation and adopt other strategies to support the sector.
IBA CEO, Kylie Lethbridge, said “Every time excise rates go up, my first thought is how many of our independent breweries are going to survive this round and who will close next.
“Over the past three years, small independent breweries in communities all over Australia have done whatever they can to be successful businesses and to beat adversity.
“The biggest issues are structural and economic and only the federal government can address them.”
Australian Brewers Guild, trading as Hawkers Beer, has appointed DBA Reconstruction & Advisory as its administrator. DBA most recently worked with Wayward Brewing to restructure its business, which involved owner and sole director Peter Philip mortgaging his home for the Deed of Company Arrangement (DOCA).
Hawkers founder and managing director, Mazen Hajjar said, “Post Covid has been a challenging period with bigger players increasingly restricting access to taps and shelf space, combined with broader economic pressures, including increased input costs and taxes. However, we are confident that the restructuring will ensure the business is in a stronger position to fight these challenges going forward.”
Hawkers directors said the decision to enter voluntary administration was to deal with financial losses accrued “in the face of increased restrictions on market access combined with significant increases in production and distribution costs”.
They said they were working with DBA on a DOCA that will provide a framework for the restructuring of the business.
Lethbridge said, “Increasing regulatory requirements and a refusal to acknowledge the size and scale difference of small independent breweries in implementing common-sense regulation is quite literally causing breweries to close.”
Latest indexation on alcohol excise
IBA said the latest CPI figures increased the excise, which now accounts for almost $7 from a 12 pack of mid-strength locally crafted beer.
“In an environment where small breweries simply cannot keep absorbing costs – the federal government is the only one that has the power to provide immediate relief,” the IBA said.
It has called for:
- freezing the indexation of alcohol excise for a period of two years;
- the $350,000 excise remission cap, introduced in July 2021, be indexed in line with inflation; and
- extending terms for repayment of excise debts that were deferred during the covid years.
The IBA says that not only does the current excise system create an unequal playing field for different types of alcohol, it makes no concessions for the range in size of breweries within the sector.
Lethbridge said, “The vast majority of independent breweries produce less than 100,000L of beer each year. To put that in context – Coopers Brewery reported 79.4 million litres and represent only five per cent of the market.
“It’s easy to see how the volumes produced by the large multinationals aren’t even seen on the same scale as our members – and yet there are no concessions provided to our small businesses.
“Beer in general will definitely survive the current headwinds. The question for government is what beer industry does it want to see in the future?”
