{"id":505122,"date":"2026-07-01T21:50:10","date_gmt":"2026-07-01T21:50:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/505122\/"},"modified":"2026-07-01T21:50:10","modified_gmt":"2026-07-01T21:50:10","slug":"distillers-warn-rising-alcohol-tax-could-collapse-an-industry","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/505122\/","title":{"rendered":"Distillers warn rising alcohol tax could \u2018collapse an industry\u2019"},"content":{"rendered":"

To put it in perspective, for every alcoholic beverage containing an alcohol by volume (ABV) level between 2.5%-6%, the manufacturer faces an excise of $38.999 per litre of alcohol. This is up from $37.836 last year.<\/p>\n

For beverages with an ABV level higher than 14%, the manufacturer faces an excise of $71.034 per litre of alcohol, up from $68.915 last year.<\/p>\n

The Herald asked Distilled Spirits Aotearoa\u2019s (DSA) Jo James for a breakdown of how that excise translates to a bottle of alcohol.<\/p>\n

The chart above breaks down the average costs that go into a 700ml bottle of alcohol with a 40% ABV, with an estimated price tag of $100.<\/p>\n

While tax and distribution take up nearly half of the expense, this includes GST, PAYE and income tax for the business, as well as distributor and retailer margins.<\/p>\n

Prices will vary depending on manufacturing processes, agreements with retailers and the types of alcohol produced, but alcohol excise has now become the single largest expense per bottle, according to the DSA.<\/p>\n

James, who is also the founder and spirit curator of Juno Distillery, said excise costs had increased by 30% over the past 10 years.<\/p>\n

\u201cEven though I\u2019m not going to change my price to my distributor, I know that every single bottle store is going to put that excise increase on to the cost of my bottles, making it even further from reach for our population,\u201d James said.<\/p>\n

\u201cSo not only will I lose domestic sales because my prices are going to be going up, but I\u2019m also going to be taxed more for what I do sell.\u201d<\/p>\n

James referenced a paper from Massey University which showed that New Zealand had one of the most liberal excise laws in the Western world, but said it did not take into account the remissions or rebates that other countries\u2019 distilling industries are given.<\/p>\n

Australia\u2019s excise remission scheme gives eligible brewers and distillers an automatic 100% tax relief on alcoholic beverages manufactured for its domestic market, with an annual cap of A$350,000 per financial year. On July 1, this is set to increase to A$400,000.<\/p>\n

The scheme has evolved since it was set up nearly a decade ago, but the Australian distilling industry\u2019s exports had increased by 68% since its introduction, according to James.<\/p>\n

Kiwi distillery exports have fallen by 28% over the same period.<\/p>\n

James said New Zealand had roughly 160 distilleries, but only 20 or fewer would be exporting.<\/p>\n

\u201cNew Zealand gins have won the world\u2019s best gin three times in the last five years, so we\u2019re producing world-class products.<\/p>\n

\u201cWe\u2019re already a country with a fabulous reputation for food and beverage, and New Zealand is perfectly positioned to be making and selling internationally world-class spirits. We\u2019re not asking for support, we\u2019re asking for that opportunity to grow the industry.\u201d<\/p>\n

She said she understood the underlying fear that a remission scheme could lead to distilleries dropping prices, which would lead to alcohol harm, but said distilleries had no intention of doing so.<\/p>\n

\u201cThey\u2019re asking for these funds to be used for capital expenditure so that we can build scale to then set fair pricing for our international customers. We\u2019re asking to have cash flow so that we can get on a plane to build relationships.<\/p>\n

\u201cThe Australian Government announced they\u2019d be putting funding towards supporting export growth into Southeast Asia. They\u2019re paying to open a new international market. Unless we have foreign investment or New Zealand investment, we\u2019re not going to get there and make that play, which is tragic.\u201d<\/p>\n

\"JennyJenny McDonald (left) and Sue Stockwell, co-founders of Dunedin Craft Distillers.<\/p>\n

\u2018Eye-watering\u2019<\/p>\n

Dunedin Craft Distillers co-founder Jenny McDonald said excise was less than a quarter of the business\u2019 revenue in early 2021, but now represents over a third.<\/p>\n

\u201cExcise has just kept chucking up and, like most small and craft distillers, you can\u2019t just keep increasing your prices. There is a price band, so we\u2019ve been stuck on the same price, but our costs don\u2019t have the room to move that the big multinationals do.\u201d <\/p>\n

McDonald said costs for the business had increased over the past few years, particularly for freight and raw materials.<\/p>\n

She echoed James\u2019 sentiment, and believed a remission scheme would be a \u201cgame changer\u201d for the sector.<\/p>\n

\u201cIt would give us room to breathe, give us the abilities to actually develop and market some of our most successful products. Literally, that excise is like operating with your hands tied behind your back.<\/p>\n

\u201cIf they [the Government] keep going this way, all they\u2019re going to do is put a lid on innovation and creativity. I\u2019m not exaggerating when I say they\u2019re literally risking the collapse of an industry. An industry that has so much potential and I think a huge amount to offer.\u201d<\/p>\n

\"Scapegrace\u2019sScapegrace\u2019s Mark Neal (left) and Daniel McLaughlin outside their Central Otago distillery.<\/p>\n

Scapegrace distillery co-founder Daniel McLaughlin said customers wouldn\u2019t see a change from the increase in excise rates, but that didn\u2019t mean the increase wasn\u2019t felt.<\/p>\n

\u201cWe\u2019ve made a deliberate decision to hold our prices and absorb this increase rather than pass it on. In the current economic environment, with households watching every dollar, putting prices up simply isn\u2019t the right thing to do. The cost doesn\u2019t disappear though; it lands on us,\u201d McLaughlin said.<\/p>\n

\u201cThe frustration is that this increase is automatic. It\u2019s indexed to inflation and applied every July regardless of how the industry is actually trading, so our tax bill goes up even in a year when volumes and margins are under real pressure. We can absorb it this year, but it compounds, and there\u2019s a limit to how long any producer can keep doing that.\u201d<\/p>\n

McLaughlin provided the Herald with a similar breakdown of how excise contributes to the distillery\u2019s bottle price, confirming that of a $79.95 bottle, $21.15 is excise, or just over a quarter.<\/p>\n

He said he was supportive of an excise remission scheme similar to that of Australia, and said it was a deliberate decision by the Australian Government to back local producers.<\/p>\n

\u201cNew Zealand has nothing equivalent. Every litre of alcohol is taxed at the same high rate whether you\u2019re a global multinational or a start-up distillery in a shed, and on top of that the rate rises automatically every year.<\/p>\n

\u201cIt adds pressure exactly where the industry can least absorb it. Hospitality is doing it tough, consumer spending is soft, and input costs across glass, freight, energy and dry goods have all climbed. An automatic tax increase on top of that is the definition of bad timing.\u201d<\/p>\n

Government responds<\/p>\n

Although Minister for Customs Casey Costello sets the rules around excise, she is not responsible for the amount of money associated with the excise.<\/p>\n

That decision instead falls with Parliament\u2019s finance and expenditure select committee, headed by the Minister of Finance Nicola Willis, although Willis is unable to comment on the decision because of a conflict of interest.<\/p>\n

Associate Minister of Finance Chris Bishop was able to answer questions from the Herald, and said the excise had traditionally gone up tied to the CPI each year.<\/p>\n

\u201cThere would obviously be revenue implications from not doing so. We assess it every year and will do so again next year.\u201d<\/p>\n

Bishop did not return comment on the merits of a remission scheme before publication.<\/p>\n

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.<\/p>\n

Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"To put it in perspective, for every alcoholic beverage containing an alcohol by volume (ABV) level between 2.5%-6%,…\n","protected":false},"author":2,"featured_media":505123,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[20784,8831,138,5842,17400,124,251979,213516,180420,123610,1874,266,2454,29273,5829,4754,111,139,69,5256,3236,52492,49464,801,3170,28702,7496,7563,26697,102,2963],"class_list":["post-505122","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alcohol","tag-an","tag-business","tag-calling","tag-collapse","tag-could","tag-distillers","tag-distilling","tag-excise","tag-favouring","tag-found","tag-government","tag-industry","tag-introduction","tag-many","tag-members","tag-new-zealand","tag-newzealand","tag-nz","tag-overhaul","tag-overseas","tag-regime","tag-remission","tag-rising","tag-scheme","tag-similar","tag-tax","tag-those","tag-warn","tag-with","tag-zealands"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/505122","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=505122"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/505122\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/505123"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=505122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=505122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=505122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}