Adelaide venue Hains & Co being pushed to the brink blaming federal alcohol tax and rising power costs

Adelaide’s hospitality sector is struggling amid a cost of living crisis, rising power costs and a “misguided” federal government alcohol tax.

Unrelenting federal alcohol taxes and crippling power bills threaten to send a pair of much-loved city venues to the wall if policies don’t change.

Hains & Co and Ralph Louis Frederick owner Marcus Motteram says the extra costs of running his bars – including a doubling of his electricity bill since last year – have forced him to raise his prices for the first time in four years.

That has helped him pay above-award wages for his 12 staff, as well as power and insurance increases and higher prices for ingredients and freight.

But Mr Motteram said it was the federal alcohol tax – the third highest in the world – that was “misguided” and hurting hospitality businesses.

Mr Motteram is calling for tax credits for the distilling industry, similar to the support for the state’s wine industry.

Marcus Motteram said federal alcohol taxes and crippling power bills have driven him to the brink of closure. Picture: Dean Martin

“I feel we need to do the same with our fledgling distilling industry,” he said.

“There needs to be more support along those lines.”

Australia’s alcohol excise regime on beer and spirits is among the highest in the world, and calls for tax relief for the sector continue to grow.

Receipts from tobacco excise are forecast to soften in the next five years while government indexation on alcohol, derisively known as the ‘infinity tax’ because of the twice-yearly CPI-linked uplift, is expected to yield $9.4bn by 2027-28 financial year.

Mr Motteram opened Hains & Co in 2015, and sources as much of his boutique distilled products locally, including famed SA gin brands Never Never and Prohibition.

“The quality of what South Australian distillers are doing is something we love to champion and share with people,” Mr Motteram said.

“Small bar culture, together with the emerging craft spirits industry, have helped change Adelaide’s drinking culture in a very positive way.”

While all costs have surged, it is the six-monthly alcohol tax that he identified as the “drastic” and “misguided” cost applied to hospitality venues as one of the biggest threats to the sector’s viability.

Mr Motteram said the spirits tax rate was just under $80 per litre when he first opened his bars it is now over $104. Picture: Dean Martin

“The spirits tax rate was just under $80 per litre when we first opened our doors,” he said.

“Effective from August 5 this year, it is almost $104 per litre, having increased by 20 per cent since inflation took off during the pandemic.

“That is a drastic cost increase for distillers, venues, and customers to bear, and it seems very misguided.

“At last count, there were 108 (distilleries) in South Australia alone. At a time when the government should be lifting up this beautifully growing industry, it seems to be slapping it down.”

A spokesman for Treasurer Jim Chalmers said governments of “both persuasions” applied the indexation and it was “not a new decision”.