Pechey gin maker toasts budget that gave him room to grow

A change in how the government taxes craft beer and small-scale distilleries will put an estimated $55k back in the pockets of regional businesses.

A month ago, Pechey gin maker John O’Brien was content to let his business simmer and slowly grow over time, but one item in the Federal Government’s 2021-22 budget will fire up his operations.

If parliament passes the federal budget, it will lift the excise cap on craft breweries and small-scale distilleries.

In the past, they received a 60 per cent rebate on the excise paid on the first $100,000 in sales, but Treasurer Josh Frydenberg intends to lift that to 100 per cent for the first $350,000 in sales.

Mr O’Brien said the deal opened up a raft of opportunities to sell his product outside the Darling Downs.

“We can now look at wholesaling to bottle shops whereas before it was not cost effective,” he said.

The 100 per cent rebate will remove about 20 per cent of the cost of selling to a bottle shop, which makes the margins for stocking locally produced gin more attractive for both the retailers and Mr O’Brien.

To date, he was limited to selling via the business’s website, at the cellar door or farmers’ markets and food festivals.

Importantly it means more money to grow.

“Distilling is a high capital process, and now we can look at expanding,” Mr O’Brien said.

“We will be able to invest in our business and in time that will provide more jobs and opportunities for the region.

“At the end of the day, producers in the North Darling Downs would like to see the High Country become a world-class tourist destination.”

The excise change is expected to benefit about 600 brewers and 400 distillers to the tune of about $55,000 a year.

About two thirds of eligible businesses operate in regional Australia, employing about 15,000 people.

Meanwhile, a report from the Gin Boutique listed the high price and the difficulty in finding stock as main factors limiting how much Australian gin drinkers buy.

Mr O’Brien said he hoped having Pechey Distilling Co gin in bottle shops across the country would serve as a calling card for the region.

“We already have people asking us where they can buy our gin,” he said.

“This will add to Pechey Distilling Co being a destination for the region.”

The changes to the excise come at an opportune time for the distillery after it secured an artisan producers licence giving it great freedom to sell its products off site.

The operation will also release its latest offering at the Hampton Food Festival this weekend – Toowoomba Dry.

“It is a traditional dry gin, we have used traditional botanicals with the major flavours coming through being native finger limes from Halo Farms in Hampton,” Mr O’Brien said.