Adelaide pub and bar owners warn booze prices set to rise further as alcohol tax retained

Hospitality leaders say the federal government has some serious explaining to do as tax increases put a pint of beer or a G&T out of reach of the average Australian.

Adelaide pub and bar owners have warned the government’s decision to retain the “ludicrous” alcohol tax in Tuesday’s federal budget will see booze prices rise and further cripple the struggling hospitality sector.

Despite calls from industry groups to put a freeze on the twice-yearly excise on beer and spirits, there was no tax relief for operators this week.

Among the highest in the world, the controversial excise is applied in line with inflation. The latest rise in February saw the tax on beer up almost $1 to $60.12 per litre of alcohol, and $101.85 per litre of pure spirits.

Now local publicans say they will likely have to pass on the growing costs to consumers, which will see more people choose to drink at home.

Matthew Holding, managing director of Peel St bar Malt & Juniper, said he’s currently charging $14 for a basic gin and tonic, which he said is “unsustainable”.

“That’s not affordable for a lot of people,” he said.

“We charge what we charge because the distiller has to charge what they need to.

“Our prices are only going to go up … it’s an ongoing domino effect, and the problem is compounding all the time.”

Malt & Juniper’s Matt Holding. Picture: AAP/MIKE BURTON

Mr Holding said the lack of tax relief in the budget was “disappointing” and only increased pressure on a sector struggling under higher labour and electricity costs.

“People are not going to be able to afford what we’re selling … the last week has been sh*thouse,” he said.

“And we’re lucky to be surrounded by other bars. But I don’t see how it gets better. It’s only going to get harder and harder.”

Luke Saturno, owner of The Gilbert Hotel, in the city, described the alcohol tax as “ludicrous”.

“This tax will only see more and more people drinking at home,” he said.

“People can’t afford to go out and drink like they used to.”

Gilbert Street Hotel publican Luke Saturno at the bar with a beer and a gin and tonic. Picture: NCA NewsWire/Brenton Edwards.

The venue charges $15 for a pint of craft beer and $10 for a gin and tonic as they try to absorb the tax hikes but Mr Saturno said business operators and consumers alike will continue to “tighten their belts”.

“It really hits us hard. The outlook isn't bleak so much as it’s hazy … hazy like an IPA (beer), not a clear pilsener,” he said.

Tuesday’s budget also offered $325 off energy bills for a million small businesses around the country.

The Franklin Hotel co-owner Jodie Farrell said that was a “mere drop in the ocean” for owner-operators battling to make ends meet.

“We’ve tried to absorb costs as much as we can, we can’t keep putting up prices twice a year … but there’s only so much you can do. You’re just going to keep losing customers,” she said.

Ms Farrell said customers’ spending habits had changed thanks to the cost-of-living crisis, with many choosing to spend less on alcoholic drinks.

“They might have a water or a small drink with their meal instead of a couple of pints,” she said.

A publican for the past five years, Ms Farrell said the hospitality industry had battled hard through the pandemic but this might be the last straw for some operators.

“The industry has bounced back after Covid … but something has to give or venues will continue closing,” she said. “A little more help wouldn’t go astray.”

Hospitality leader and Duke of Brunswick owner Simone Douglas said retaining the alcohol excise would make it difficult for businesses to keep prices down.

“A federal government that taxes a pint of beer out of reach for the average Australian is going to have some explaining to do to the general public and businesses alike,” she said.

Australian Hotels Association chief executive Anna Moeller said the growing cost of a pint of beer or a gin and tonic was simply “untenable” for businesses going forward.

“They have been trying desperately not to pass on these price rises … we are far from toasting a budget that will cost pubs and hotels dearly through a beer and spirit tax,” she said.