Be interesting to see what this does to the price of their brews, if it goes ahead:
Government may lighten excise load for micro-brewers
THE Federal Government is considering generous tax concessions to boost Australia's micro-brewing industry as it struggles to gain a foothold in a market dominated by giants.
Ahead of next year's budget, Federal Treasury is costing a plan to refund breweries on the excise paid on the first million dollars of annual sales, similar to a deal at present on offer to wineries.
Australian micro-brewed beer accounts for less than 0.5 per cent of the total market, compared with up to 5 per cent in countries like Canada, Britain, the US and New Zealand.
Cameron Hines, co-founder of the Mountain Goat Brewery in Richmond and president of the Victorian Association of Microbreweries, said micro-breweries faced disadvantages their larger, low-cost rivals did not. "Micro's use very expensive, traditional ingredients of the highest quality, micro's are very labour intensive, lacking large automatic machinery (and) micro's don't have economies of scale when it comes to purchasing raw materials," Mr Hines said. He said that, while micro-breweries in other countries were offered reduced excise rates of between 30 and 90 per cent to compensate, small Australian beer makers were forced to directly compete with multinationals. "Right now small operators like Mountain Goat pay the same rate of tax on the beer we produce as our neighbour CUB (Carlton United Breweries) around the corner."
Small Business and Tourism Minister Fran Bailey confirmed that the Government has been investigating ways to help the sector, saying the spin-offs for tourism could be significant. "There is untapped potential for regional tourism for micro-breweries," she said.
Paul Holgate, who runs the Holgate Brewhouse in Woodend, said that margins in the industry tended to be tight, with federal excise typically soaking up about 25 per cent of total revenue. "It's satisfying making a good beer but it would be even more satisfying if we could make a good living out it," Mr Holgate said. "It comes down to economies of scale. Big breweries also have small margins but they are selling a lot of units so it doesn't matter so much for them. But, if you're a small producer selling 100 units, it's pretty difficult."
Calculating the excise paid on beer is complex, but the proposed tax concession would offer brewers a maximum rebate of $290,000, but the rebate will probably fall between $100,000 and $200,000 for most brewers.
