June 30th 2024.
Craft beer is becoming increasingly popular in Australia, but behind the scenes, the industry is facing some major challenges. Brewery owners are struggling to keep their doors open as costs continue to rise and profits dwindle. This has hit smaller breweries particularly hard, with even well-established ones like Black Hops Brewing on the Gold Coast facing the threat of closure.
Nick Boots, a veteran in the industry, has been working tirelessly to save his brewery from going under. He knows firsthand the struggles that come with running a small business, and the current economic climate has only made things more difficult. "Everything involved in the business is going up exponentially," Boots explains. "We're talking about increases of 10-30% in some cases."
It's not just smaller breweries feeling the pressure. Capital Brewing Co, one of the largest craft brewers in the country, has also been hit hard by rising costs. "Our costs have risen almost out of control," says co-founder and managing director Laurence Kain. "Our electricity bill alone has tripled in the last two years."
The pandemic has only exacerbated the issue, with prices for materials and production costs skyrocketing. This has also led to an increase in alcohol tax, which is indexed twice a year. In the past 12 months, beer excises have risen by almost 8%, and a staggering 17% since the start of the pandemic. "44% of the cost of your beer is excise tax," Kain reveals.
According to Kylie Lethbridge from the Independent Brewers Association, Australia has the third-highest beer taxation in the world, and it's taking a toll on the industry. "The federal government is the one that can help," Lethbridge says. But unfortunately, it seems that the government has other priorities and budget constraints that may prevent them from providing the much-needed support.
Breweries are now calling on the government to take action and change the tax system to alleviate some of the financial strain. Many fear that without significant changes, more breweries will be forced to close their doors. "It feels like the government sees the industry as nothing more than a cash cow," Boots expresses. "We've already lost 5% of our breweries, and without change, we could lose another 20%."
The government, however, maintains that the recent increase in beer excises is simply a "usual, legislated, automatic indexation change." They are open to hearing ideas and suggestions, but ultimately, any changes must be weighed against other priorities and budget limitations.
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