The year just got more challenging for producers, hospitality businesses and consumers of beer, wines and spirits with the announcement that the Consumer Price Index (CPI) is 6.7 percent.
NZABC executive director, Virginia Nicholls said that in this time of rapid inflation and a cost of living crisis, extra taxes are extremely hard to absorb.
“The 6.7 percent rise in the CPI is used as a benchmark to increase the excise tax on beer, wines and spirits. The excise tax was $1.24 billion in June 2022 and is forecast to be $1.4 billion the following year. This will mean an extra $160 million in new taxes which are paid by producers and ultimately consumers,” said Nicholls.
Excise is a duty imposed on locally produced and imported beer, wine and spirits products.
The annual excise tax adjustment is based on movements in the CPI (up until 31 March 2023) and starts on 1 July 2023.
“The continuing inflationary pressure, including rising ingredient and packaging costs, skill shortages, higher interest rates, and recent flooding and cyclones means that an increased excise tax will more than likely need to be passed onto consumers,” Nicholls said.
“It is not well known that the majority of beer, wine and spirits producers, hospitality providers and retailers are small and medium-sized businesses.”
The more than 10,000 directly employed in the industry do a whole variety of jobs from orchard workers, involvement in winemaking/brewing/distilling, manufacture and packaging, scientists, accountants, marketing, transport and logistics, salespeople and retail. Indirectly 20,913 Kiwis are also employed.
“The wine, beer, spirits and beverages industry provided much-needed jobs, including all important entry-level opportunities in every small town, city centre and suburb in between. This includes 1,865 businesses across small, medium and large businesses,” said Nicholls.
