Whiskey wars: US distillers warn Australia to stick to spirit of the law

Australian distillers are misleading consumers by wrongly labelling products as bourbon or whiskey, as the spirits industry warns high taxes are prompting an illicit trade in spirits.

A federal parliamentary inquiry has been told a local producer marketing a spirit as “Bourbon: Made in Australia” infringes the rights of United States distillers because bourbon is a protected geographical term.

Palm Valley Spirits managing director Lewis Millward backs efforts to strengthen labelling laws for Australian spirits, including adhering to rules about place of origin.Credit: Natalie Grono

The federal government has also received complaints from the national trade association for US distillers about distillers in NSW and Victoria wrongly labelling products as bourbon and whiskey.

A Department of Foreign Affairs and Trade spokeswoman said Australia “takes care” to meet its obligations under a free trade agreement with the US, including whiskey labelling.

Lewis Millward’s distillery in northern NSW manufactures a coconut spirit barrel-aged in oak.Credit: Natalie Grono

But the Distilled Spirits Council of the United States (DISCUS) in 2020 wrote to then-Home Affairs Minister Peter Dutton to raise concerns about products that did not comply with provisions of the free trade agreement.

The Australian Distillers Association wants beefed up labelling laws to prevent misleading product descriptions that it says is a risk to the country’s trading reputation.

The association said the spirits industry would benefit from improved product descriptions to enhance the quality and integrity of spirits made in Australia.

In a submission to the inquiry into food and beverage manufacturing it said Australia’s trading reputation would benefit through avoiding labelling disputes, “especially over terms protected by certification trademarks, like ‘Scotch Whisky’ and products considered distinctive to a particular place of origin, like ‘Bourbon’ and ‘Tennessee Whiskey’.”

Old Number Fifteen Bourbon Whiskey produced by Melbourne-based Edgemill Group was one of the products highlighted in the complaint by DISCUS.

Edgemill’s managing director Alex Stavrakoulis said accurate product descriptions are essential to maintaining the integrity of the industry and avoiding trade and labelling disputes.

“We do not believe that our spirit contravenes US law, as our production process adheres to the legal requirements set forth under the Australia-US free trade agreement,” he said.

ADA chief executive Paul McLeay said most Australian spirits manufacturers recognise the importance of protected geographical indications and labelling laws, “rather than imitating spirits that are distinctive of other nations”.

“However, it is a fact that there is not currently any single authority in Australia that can raise an objection to the isolated cases we have seen of spirits labelled unlawfully, nor are there any adequate forms of recourse available under Australian law,” he said.

McLeay said federal policy settings had not kept pace with the rapid growth of the spirits industry from 28 distilleries in 2014 to more than 700 a decade later.

McLeay wants a standalone body to promote Australian spirits through marketing as well as improving regulation and compliance.

He also called for the Australian Tax Office to use blockchain technology to reduce the illicit trade of spirits, “which is becoming more attractive to organised crime as the spirits excise tax in this country gets increasingly out of hand”.

The stoush over labelling follows concerns that some distillers are labelling products whisky in contravention of laws requiring whisky, brandy and rum to be matured by storage in wood for a minimum of two years.

Palm Valley Spirits managing director Lewis Millward backs efforts to strengthen labelling laws for Australian spirits, including adhering to rules about place of origin.

“We are indeed concerned that consumers may be misled by products improperly labelled as bourbon and whiskey,” he said.

Millward said misleading labels undermines consumer trust and harms the reputation of legitimate producers that adhere to strict production standards and labelling requirements.

Millward’s distillery in northern NSW manufactures a range of products including a coconut spirit barrel-aged in oak.

“We don’t, and can’t by law, call it a bourbon or whiskey as its source is coconut nectar not grains or corn,” he said.

“We believe that clear and honest labelling helps protect both consumers and the integrity of the spirits industry, ensuring that high-quality, authentically produced spirits are easily identifiable.”