Breweries say the increase in beer tax this week will be a hard one to swallow as the largest beer tax in recent memory is on the cards.
The beer excise tax is set to increase by the highest level in over 30 years, with an increase of $28.3 million more than last year.
"The beer excise increase could not come at a worse time for brewers and consumers, with the effects of COVID-19 still holding sway on the economy, the cost of living squarely in focus for New Zealanders and the hospitality sector far from being back to normal," Brewers Association of NZ executive director Dylan Firth and Brewers Guild executive director Melanie Kees said in a statement.
The country is experiencing a cost of living crisis, with inflation hitting the largest year-on-year increase in 32 years of 6.9 percent in the March quarter, and now beer is being added to the growing list of price increases.
"At a time when New Zealanders are facing an economic crunch, the increase to beer tax is a hard one to swallow," Firth and Kees said.
Under the projected increase the excise tax would now be $83.08 per keg, $0.55 per bottle and $0.71 per pint - all before GST is added.
While the increase is only expected to equate to around $0.05 per pint, the brewing and hospitality industry will be hit harder.
"One of the most important avenues for brewers is selling their product through bars and restaurants and the hospitality industry has suffered badly during the past two years and needs specific support. Yet here is the wider brewing and hospitality sector being hit with an extra $28.3 million tax," the pair said.
They say the tax is the same as hiring two to three new staff members for their breweries, making a difficult decision for breweries to decide where to pass on the extra costs.
But it isn't just beer affected by the high inflation rates - wine and spirit drinkers will also see a rise in prices.
The NZ Alcohol Beverages Council (NZABC) said consumers are likely to foot the $84 million bill for their favourite beer, wine or spirit due to the historic rise in inflation announced on Thursday.
NZABC’s executive director Bridget MacDonald said with increased costs - especially from transport and the recent rise in the minimum wage - there becomes a "tipping point" where businesses have to pass on some of the costs to consumers.
"It will be up to individual businesses to absorb costs or pass them on. But, right now, we’ve got businesses heading into a quiet winter weighing up whether to pass it onto customers who are already being careful with their spending during this time of economic uncertainty," MacDonald says.
The Brewers Association and Brewers Guild of NZ is calling for the Government to deliver a beer tax relief to pubs, clubs, beer drinkers and other venues through a cut in keg beer tax by 50 percent.
"A keg specific excise reduction such as this is targeted only to hospitality operators, as kegs are almost exclusively used by bars and restaurants. This also provides targeted support for small breweries who generally have higher ratios of product sold through kegs," Firth said.
He said overseas in Australia and the UK there are long-standing specific excise rates for keg beer.
"Government has shown with the petrol excise tax reduction, that is willing to use novel ideas to solve different cost of living problems," Firth says. "Again, we reaffirm our call for this action to be considered."
