Craft beers on Gold Coast unlikely to be cheaper despite tax reforms

CRAFT beers made on the Gold and Tweed Coasts are unlikely to be much cheaper despite tax reforms. Here’s the reason why.

IT seems the froth and bubbles surrounding the prospect of cheaper craft beers after Federal Treasurer Scott Morrison’s pre Budget announcement have gone as flat as a hot beer in the sun.

Mr Morrison announced that all beer sold in kegs larger than 8 litres would be taxed in the same way as kegs larger than 48l.

Prior to the announcement, brewers who used 30 litre kegs were taxed 40 per cent more than those who used 50 litre kegs.

Black Hops Brewing co-founder Michael McGovern. While he welcomed Federal Government moves to cut tax on smaller kegs used by craft beer brewers, he thinks it won't result in cheaper brews for drinkers.

At the time, the Treasurer said: “This not only champions the craft brewers that we’ve all grown to love, it raises a very tantalising prospect for Australians: the likelihood of cheaper craft beer.”

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However craft brewers on the Gold Coast and Tweed, while welcoming the change, have some bad news for Mr Morison and craft beer drinkers — it won’t make any difference price wise.

Black Hops Brewing co-founder Michael McGovern said that there were very few craft brewers who used 30 litre kegs and while the tax on them would be cheaper, it wouldn’t be practical or cost effective to change.

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“We use predominantly 50 litre kegs and for us to stock up on 30 litre kegs wouldn’t be worthwhile,” Mr McGovern said.

“Our more popular brews are supplied to venues in 50 litre kegs and while there may be opportunities for us to put seasonal or special release brews into the smaller kegs, the bottom line is that the tax relief won’t have significant impact on the cost price to craft beer drinkers.

“The price across the bar is determined by the premises. If there is any benefit about smaller kegs, it’s that there could be a higher turnover ensuring a fresher product.”

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Mr McGovern said the increase in the amount brewers are able to claim in annual excise tax rebate from $30,000 to $100,000 was also welcomed but the benefits of that would go back to the brewers in terms of production costs not in prices.

A brewery. (AAP Image/ Justin Sanson)

“With additional funds that may come from the move, those craft brewers who are in a position to claim more will be able to reinvest the money into their operations and volumes but it is not going to result in cheaper craft beer,” he said.

Mr McGovern said the big positive to come from the Federal Government announcement was the recognition of the craft beer industry and it’s impact on the economy.

“The industry is very much hands on and employs quite a few people at a local levels, from production, delivery through to the craft beer bars stocking the beers,” he said.

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“The Federal Government’s moves and also recognition by the Queensland Government that the craft beer industry needs assistance will be beneficial in helping us create jobs across the sector.”

The government changes won’t have much effect on the Coast.

Tweed Heads Pickle Pig Brewery owner Paul Brewer said the Federal Government changes would have little to no effect on his operations.

“I have 120 of the 50 litre kegs so it doesn’t impact on my cost price for my beer,” Mr Brewer said.

“I couldn’t afford to change over to the smaller kegs but it might be something to consider down the track.

“Besides, the availability of the smaller kegs in Australia isn’t great so they have to be brought in from overseas which is an added cost.

“In the US, there is a market for the smaller kegs because of the volume of craft and micro brewers who are catering for small local markets.

“For smaller brewers like ourselves, we deliver our own beers to venues so it becomes a matter of logistics in terms of the number of kegs a place wants and on a practical level how many they can store on site.

“While the tax reduction this is a positive move, I don’t think drinkers will see a drop in prices across the bar for draught craft beer.”