Independent brewers call for tax relief to help weather COVID-19 storm
Moorabbin’s 2 Brothers Brewery has laid off all staff as the coronavirus crisis bites, and nearby Bad Shepherd Brewing Co has shut its pub. As independent breweries plead for help, the two businesses have told how they “fell off a cliff”.
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Australia’s independent brewery industry is on the brink of collapse as the COVID-19 pandemic sees the craft beer boom go flat.
Three years ago, the sector was worth $740 million annually to the economy, now small-batch brewers are pleading with the Federal Government to help keep them afloat.
Businesses have turned to takeaway and home delivery services to try and boost revenue and retain employees but they say it isn’t enough.
Moorabbin’s 2 Brothers Brewery co-owner Dave Ong told the Leader he had been forced to lay off all 15 staff members.
“We’ve been really hit hard because most of our sales were kegs which we supplied to pubs,” he said.
He estimated revenue was down 90 per cent.
“We pretty much fell off a cliff when COVID-19 hit,” Mr Ong said.
“Six months ago if you asked how we were positioned, doing kegs was something you’d boast about, but it’s made us worse off now.
“We’re trading as a bottle shop five days a week and doing online orders which is helping a bit and we’ve had some great support from locals but it’s challenging.
“We’re offering free home delivery — it’s not that profitable but it’s worth it to keep the brand alive.”
Mr Ong said 2 Brothers was not pressing its wholesale clients for payment in a bid to try and keep everyone running.
“A big concern is that some of the venues we supply might not reopen after the shutdown because it might not be viable, so we’re trying to support those customers,” he said.
Dereck Hales, who owns Bad Shepherd Brewing Co in Cheltenham, said closing the brewpub down amid COVID-19 restrictions had resulted in a huge slump in sales, with more than two thirds usually generated from the venue.
“We also had to stand down 22 staff members, drastically reduce our employee hours and close our head office with staff working from home where possible,” he said.
And a new survey of 650 craft breweries has revealed 93 per cent are making a loss, with sales down by 69 per cent on average.
The Independent Brewers Association of Australia survey of its members also found more than half (61 per cent) of breweries would not survive without extra help from the government.
Independent Brewers Association chairman Peter Philip said the government’s current wage subsidy package wasn’t enough to save the industry.
The association has written to the Federal Government to ask that the annual rebate offered on beer excise for small breweries be raised from $100,000 to $350,000 in a two-year trial.
This would bring the brewing excise rebate in line with the wine industry’s Wine Equalisation Tax Rebate.
The association’s proposal also asks for the rebate to apply to the current financial year as well as the next, and calls for the rebate to apply to 100 per cent of the excise paid.
Further, they’ve pleaded for brewers to only pay excise after they’ve exceeded the rebate amount, rather than paying it upfront and claiming a refund.
Mr Philip said the tax went up twice a year and was the fourth highest in the industrialised world.
“Indie brewers are at a massive competitive disadvantage to the multinational mega-brewers because our beer is handcrafted, which means we employ 15 times the number of employees per litre of beer,” he said.
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The association is calling on the Federal Government to give them a “critical” reduction to the tax excise, a measure which has already been granted to the wine industry.
“Aussie independent brewers and distillers are not asking for anything more than the support the wine industry has enjoyed for many years,” Mr Philip said.
“We are not asking for more than our fair share, just enough to put us on a level playing field.
“If we don’t do something now the losses could be devastating for the entire independent beer industry.”
The association is also calling on beer drinkers to continue to support local businesses in a campaign called #KeepingLocalAlive.
But Assistant Treasurer Michael Sukkar said the Government had already provided plenty of help to craft brewers, with eligible businesses given “cash flow support payments” of up to $100,000 so they can keep operating, pay their rent and bills, and retain staff.
Some are also eligible for the JobKeeper wage guaratnee for their employees.
“The Morrison Government has previously made changes to assist craft brewers by ensuring they could access lower draught beer excise rates previously only available to larger brewers who package their beer in larger kegs over 48 litres,” he said.
He all but ruled out further increases to the alcohol excise refund scheme cap, which supports domestic brewers, and manfacturers of distilled spirits such as gin and whiskey.