Support New Zealand's craft beer brewers - Sign the Petition

[nzbrewer]

Sign the Petition -

The NZ government is considering raising taxes for all beer brewers to offset the social costs of irresponsible drinking. This could put some small craft breweries out of business. This poll argues that a 'one size fits all' increase in taxation will have a disastrous effect on New Zealand's boutique breweries - and that these brewers are the ones we should be rewarding not penalising.

Why? Because small boutique and craft breweries emphasise taste, flavour and create environments that encourage sensible and responsible drinking, whereas the Big Two brewers (DB and Lion Nathan - both foreign-owned) discount their beers to gain market share. They tend to target their advertising towards young people and encourage buying decisions made on the basis of price - bang per buck - not beer quality.

For the reasons above, we will lobby MPs and other supporters of great New Zealand craft beers to give tax breaks to small Kiwi-owned brewers. Sign our poll if you want New Zealand's craft brewers to survive!

Thank Mic Dover for starting the petition

Sign the Petition -

[Christian]

Guess we'll have to wait and see if any legislation comes to pass but it would no doubt be beneficial to have a persuasive and wide-spread argument against any such moves - i.e. teaming up with craft wineries who probably have a similar perspective. There are arguments to be had about the actual effects of a tax hike on the craft industry - but on the face of it, it seems particularly unfair that an industry that has no doubt done far more than any government ad campaign to improve NZ's drinking culture should then be asked to pay extra for problem drinking. There must be better ways to tackle the costs of problem drinking than a blunt and lazy tax increase.

[HerrSchnapps]

We are talking about the govt. here...

[Greig McGill]

It's worse than just lazy. It's dishonest. It's yet another tax grab disguised as "think of the children" style bollocks. It's designed to paint any objectors as evil people who obviously don't care about their fellow humans.

[Soren]

Could raised excise not be a possible positive thing for craft breweries?

Example:
Lets say that the excise is raised by $1 per litre.
If Swill sells for $3/ litre and craft brew at $10/litre, that means that the price of Swill is raised by 33% but the craft beer only by 10%.
Could this not be positive for the craft industry? Could it not bridge the gap in price and make more people choose craft beer?

Obviously the petition is right, it is not the craft brews that people drink abusive amounts of and therefore it should not be penalized but it sems to me that would be very hard to get through to the law makers.

[James P]

Any increase in the cost impacts on craft breweries ability to get more people buying their product. Yes on paper the increase is less, however it will still cost $1 more to buy.

Craft breweries probably don't have as much room to move as the swill makers.

It will probably mean more home brewers, at which time the government will start to tax the ingredient suppliers to ensure the home brewer is being taxed for making their own!

[Christian]

Shhhhh, please don't give them ideas!! :-)

[Steve Baker]

Its possible that cost increases impact craft brewers more, since retailers will often have a percentage in their markup calculation.

This would amplify any cost increase, making it even bigger.

[Tony]

Lets look at a few facts (and some assumptions):

Goeffrey Palmar has been commissioned to look at this. At the very moment, he is assessing the tax on alcohol and the health costs of alcohol abuse on NZ society and how it can be better funded. This is partly based on this document www.ahw.co.nz/pdf/Excisetax221dec2004.pdf. At present the Governments coffers are hurting. I have it on good advise (from a large Accounting firm), that IRD is looking at everything, in order to screw the last cent out of clients in order to make sure everything is paid. Based on this, you can bet your last dollar, what the outcome of this review will be. Whether you agree with the reasons, of why the excise is being reviewed or not, they aren't doing it in order to bring it down.

The profit margins of the craft brewers, is already very thin. One of 2 things (or both), is likely to happen, if the excise tax is increased: 1. the price of beer will increase. 2. Some craft brewers will go out of business.
This is based on what has happened in Australia, where they have/are going through exactly the same exercise. It last happened in the 90's. Not long ago, the majors looked at ways, in which they could bring down the cost of brewing to as much as 10c/litre. I have had that on good authority. I am not sure if they succeeded, but you can be sure they have tried. Think about that for a second and consider how much punters are paying for that slop and do the math? Are they going to be hurt by an excise hike? Last year, excise went up by 3.5%. the majors raised their prices by 5.3-5.5%, accordingly.

All this is fact and I can substantiate it, if you want me to. Whats my point:

We as SOBA members and avid craft beer fans, have an obligation, to support craft brewers. That's what SOBA stands by. I agree, that you can't differentiate between the breweries. But as with wine, you could exempt, the first few 1000 litres (or what ever). This is done in Australia also. there are also a few other tools in the box (which have already been mentioned). Ask yourself, can you afford to pay more for your favourite craft beer? Would you be willing to pay more for it (based on higher tax)? Do we want to see good craft brewers go out of business? reducing our choice of fine beer? and see good entrepreneurial brewers suffer? To the benefit of the tasteless slop. Part of SOBA's aim is to educate the beer drinking public on better drinking habits and the benefits of craft beers. Now we aren't going to be able to educate everyone, but does that mean we have to accept tax gouging and a reduction in choice, as a result?

[Geoff Griggs]

This is fantastic news...

LIANNE DALZIEL BACKS NELSON PUB'S BEER TAX CAMPAIGN

Labour MP Lianne Dalziel has backed Nelson pub The Free House's campaign to
get tax breaks for craft brewers.

Ms Dalziel was speaking at a public meeting in Nelson yesterday (Wednesday)
organised by Nelson-based Labour list MP Maryan Street to discuss possible
changes to liquor laws in light of the Sale and Supply of Liquor Enforcement
bill, which is before a parliamentary select committee.

Ms Dalziel backed Nelson publican Mic Dover, who has started a petition
asking the Government to give tax breaks to boutique breweries in response
to Sir Geoffrey Palmer's comments that increasing the excise tax on all
alcoholic products could be one answer to the social cost of binge drinking.

"On tax increases, I totally agree with (Mr Dover),"says Ms Dalziel, "who
raised a very good point . They (craft beers) are not the problem as far as
beer sales are concerned, therefore across-the-board tax increases would
unfairly impact on them as compared to the major suppliers of beer, which
are actually supermarkets, not micro-brewery operations or indeed some of
the bottle stores we have around New Zealand."

The online petition was launched this week by Nelson's The Free House pub
and has already gathered over 500 signatures from all over New Zealand as
well as craft beer fans as far afield as Australia, the US, Germany and
Sweden.

The Free House is New Zealand's first real free house - a pub untied to any
brewery and dedicated to serving craft beers in a socially-responsible
environment. The Free House is worried that proposed tax rises for beer will
disproportionately penalise craft brewers - taking a hit because of the
binge drinkers who would never go near premium beer.

The Free House is promising to lobby MPs and other supporters of great New
Zealand craft beers to give tax breaks to small Kiwi-owned brewers. The
petition is at www.gopetition.com/petitions/craft-beer-brewers.html or click
on the link at www.thefreehouse.co.nz

[JR]

The government want to increase the price of alchohol to reduce excessive consumption and we are concerned that it will make the already expensive beers even more expensive. A way for us to both get what we want is for the government to introduce a minimum price rather than a tax. i.e if it became illegal to sell alchohol for less than 14c per ml of alchohol. that would make a can of average strength beer at least $2. That way the better beer does not change in price, the cheap crap will become more expensive (curbing consumption?) and there are no silly ways for big brewers to get around it. They only down side (for the government) is not getting as much extra tax revenue. However they will get a little more tax as the GST will increase with the increased price and the cheap to produce beers will make more profit, which is taxable at standard company tax rates.

[HerrSchnapps]

Email back from Eric Crampton:

I talked about this briefly on my blog a couple months back:
http://offsettingbehaviour.blogspot.com/2009/05/alcohol-taxes-and-e...

I'm not a member at that site so I can't post there, but feel free to pass along anything that seems helpful.

Long story short: alcohol taxes are per volume alcohol, not ad valorum. Consequently, they make up a much much smaller portion of the price of craft beers than of the price of DB or Tui. Alcohol taxes are roughly $0.25 for a standard drink (10 grams alcohol). If a crappy student beer sells for $1 including tax and a good Emerson's or Three Boys sells for about $4.00 including tax, then a doubling of the tax raises the price of the crappy beer by twenty five percent while only increasing the price of the good beer by a quarter of that: about six percent. Elasticity is always measured in percent changes: percent change in quantity with a percent change in price. If we assume price elasticity is the same for craft beers as for student beers, then it's the student beers that take the bigger hit, not the craft beers. And, we'd have reason to expect price elasticity for the craft beers to be lower as they're hitting a higher income demographic on the whole. I'd be very surprised if a tax increase hurt the craft brewers more than it hurt the big guys.

I'm hoping it doesn't have to come to that at all though. The BERL report really cannot be used as the basis for policy. I've noted some of the reasons over on my blog. http://offsettingbehaviour.blogspot.com/2009/05/costs-of-everything... summarizes some of the argument, but I've done a lot more work since then that I'll very soon be making public. Stay tuned.

(and a further email):

Oh, I'd also share the various folks' concerns about how differential tax rates would invite crazy gaming of the system. We should be fighting the tax increase, full stop, not trying to dump on folks who make beer that I'm less a fan of. Heck, I kinda like Macs and Monteiths and even Speights Dark.

First they came for the RTDs, and I said nothing 'cause only people I don't like drink RTDs...

[Tony]

Good post Schnapps, although I find it a little contradictory.

percent change in quantity with a percent change in price. If we assume price elasticity is the same for craft beers as for student beers, then it's the student beers that take the bigger hit, not the craft beers.

Although that's correct, it doesn't take into account the economy of scale. Meaning the big 2, produce a lot more volume and make their profit by selling in quantity. The craft brewers obviously do not, and must make every litre count, in order to maximize profit. In short, the cost of production, for a craft brewer is a lot closer to the sale price, whereas the slop produces a lot more for less and their profit margins are greater.

We should be fighting the tax increase, full stop

Never a truer word spoken, you are obviously endowed with infinite intelligence. ;)
Having said that, target taxing the products (RTD's, cheap slop), that are causing the real health problems, would be fairer and target the real culprits. Although we know that it is not likely to happen.

Heck, I kinda like Macs and Monteiths and even Speights Dark.

Umm, you had me there, for a minute.

This debate, I think was getting closer to the core of the argument. http://realbeernz.ning.com/forum/topics/should-nz-raise-the-drinking. But I don't want to open that old can of worms.