Australia’s spirits industry has the potential to reach AU$1 billion in annual exports by 2035, but only if the government takes action to address policy and regulatory barriers, according to a new report.
The Spirits Industry Competitiveness Plan, commissioned by the Australian Distillers Association and Diageo Australia, highlights the twice-yearly excise tax hike on alcohol as a major obstacle to growth. Australia currently has the third-highest spirits tax in the world, with the excise tax rising to AU$101.85 per litre of alcohol in February 2024.
The report argues that freezing this tax for two years would allow the industry to flourish, creating nearly 878 new full-time jobs and generating an additional AU$111 million in direct economic contributions.
“This report proves what distillers right around this country already know: Australia’s spirits tax has significant implications for the competitiveness of the spirits industry and the ability for distilleries to scale and attract investment,” said Paul McLeay, chief executive of the Australian Distillers Association.
Dan Hamilton, managing director of Diageo Australia, echoed this sentiment, noting the “enormous promise” of the sector. “Diageo has a strong track record in investing in great Australian spirits brands, but this report clearly demonstrates current policy settings are limiting the industry’s growth,” he said.
The report also highlights the disparity between Australia’s success in wine exports and its lagging spirits exports. While Australia ranks sixth in the world for wine exports, it sits at 29th for spirits.
“Our analysis shows that… even though we perform better than the global average for spirits export potential, we’re significantly behind the global lead pack,” said Amit Singh, managing partner of Mandala, the research firm that prepared the report.
The report’s findings come as the government launches a parliamentary inquiry into expanding innovation and value addition in food and beverage production. The Australian Distillers Association welcomes this inquiry and looks forward to contributing their expertise to the discussions.
