Alcohol Industry at War over Threat to Common Cheap Wines

The wine industry has gone to war over likely changes to alcohol taxes that could more than triple the price of a $10 cask of wine but cut the price of bottled wines over $27.

High-end winemakers are at loggerheads with bulk wine producers over how to respond to the release next week of the Henry tax review that will recommend Australia move to a volumetric tax on wine.

Health campaigners recently added their voice to the debate, saying $2 bottles were “far too cheap” and the current tax arrangement for wine increased alcohol dependence among vulnerable groups such as indigenous communities.

The introduction of a volumetric tax would inflate the price of a five-litre cask of wine from $11 to more than $35. Better-quality $20 casks would double in price. But producers of premium wines believe an end to the value-based tax on wines would rejuvenate the industry by encouraging smaller, quality winemakers, end the annual glut of wine sold off below cost price and bring quality wines into the mainstream price bracket.

The Australian Drug Foundation (ADF) supports a “stepped-volumetric tax” that would ensure a higher minimum price for alcohol without allowing spirits and ready-to-drink products to reduce price.

ADF national policy manager Geoff Munro said: “Cheap alcohol is often drunk by alcohol-dependent people and does enormous damage to indigenous communities. We would like to see a minimum price for alcohol so that it is no longer possible for winemakers to flush out their glut by putting out wine at $2 a bottle.”