Craft Beer Market the new Boom Industry?

Australia has always been known as a beer drinking nation and the craft beer industry is showing significant growth in Australia with the trend of opening breweries offering unique tastes and colour, has huge growth potential in Australia.

According to Beer Cartel’s 2017 consumer survey, on average craft beer drinkers weekly spend is AUD $55 with the majority of drinkers in the 30-39 year age demographic.

Independent research (source: Goldstein Research) has forecast that the Australia craft beer market will reach $325 million by 2025, growing at 5.30% annually.

There are a number of factors contributing to this growth including the growing number of breweries, rising consumption of alcoholic drinks, developments in flavours and packaging, and an increase in overall spending on this market segment.

On the basis of craft beer style, Ale style accounted for largest market share of 53.1% in 2017. The pale ale and Indian pale ale style of craft beer are most preferred by the consumers, with 85%-90% share in Australia’s most consumed craft beer style.

There are said to now be around 500 craft breweries in Australia according to the Independent Brewers Association (IBA), and in the 2015 financial year, craft brewers enjoyed revenues of $454 million. In fact, one in 10 beers now sold in Australia is a craft beer. In all, some industry experts predict that craft beer’s share of the beer market will double over the next 10 years.

Weekly Spend on Beer

Beer and Taxes

It’s true, Australians pay amongst the highest excise (tax) on beer in the world, they then pay a further 10% in GST on the excise, then pay another 10% GST on top of everything at the retail end.   Despite this the segment is growing.

Whilst the industry is heavily regulated from a taxation, licensing and administration perspective, there are some benefits available to craft beer manufacturers.

Announced in the 2018 Federal Budget, alcohol manufacturers could previously claim a refund on the excise they pay of up $30,000. That will be increased to $100,000 from July 1, 2019.

Kegs larger than 48 litres have previously been taxed at a lower rate than smaller kegs, however 2018’s Federal Budget changed the rules so that all kegs larger than 8 litres will be taxed the same giving smaller craft brewers a more competitive playing field.

PJT has a good understanding of the licensing and taxation regulations surrounding the Craft Beer Market.  If you are a craft brewer or looking to move into the craft brewing market, contact our qualified advisors for a confidential discussion on what you may need to know, and the taxation and licensing requirements.