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Alcopops Company Says Aussie Tax Hike Won't Work

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Fuseworks Media
Fuseworks Media

Wellington, April 28 NZPA - The boss of Australasia's largest ready-to-drink (RTD) producer says a hefty hike in excise tax on pre-mixed drinks in Australia is unfair.

Independent Liquor's chief executive Doug McKay said the move would push the price of RTDs, or "alco-pops" as they are also known, up 25 percent.

Australia has lifted the tax from $39.36 per litre of alcohol content to $66.67, putting it on the same level as spirits.

Mr McKay said it was unfair to equate RTDs with spirits as they had a 5 percent alcohol content, comparable with beer.

"We're really disappointed because it's been a politically motivated move in our view, supported by the beer industry in particular who have been competing very strongly with RTDs in the last five years and losing."

Mr McKay declined to say how the private-owned Independent Liquor would be affected but confirmed about 60 percent of the company's sales were made in Australia.

He said the tax rise would not solve the concern of binge drinking.

"Binge drinking is a social and community issue and where it does occur, it is across all forms of alcohol. In fact, the number one preferred binge drinking product is beer, number two is wine, and number three is RTDs closely followed by full strength spirits."

Per capita, alcohol consumption in Australia and New Zealand had decreased in the past 30 years and not increased with the introduction of RTDs in the past 10 years, he said.

Mr McKay said he had only just heard about the tax rise on Sunday and there had been no consultation with the industry.

"It's been a shambles, to be honest."

He also disputed a claim by the Australian government that the move would bring in $500m a year in extra revenue.

"That's pie in the sky, they've got no basis to support that because volumes clearly won't stay the same...and consumers will move to other lower-taxed forms of alcohol in Australia like beer and wine."

Last year Pacific Equity Partners and CCMP Asia paid $1.26 billion for 88 percent of the company, after the death of New Zealand founder Michael Erceg in 2005.

Rival Lion Nathan was interested but eventually dropped out of the bidding process.

Online news site LiveNews said today that the impact of today's move on Lion would be minor because RTDs still formed only a small part of its business.

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