A little-heralded Parliamentary Inquiry is right now looking at ways to encourage a massive potential industry; but the question is: will it come up with the goods? Belinda Jones reports.
AROUND AUSTRALIA, craft distilleries are popping up all over the place.
The nation now has around 700 craft distilleries, each of them uniquely different.
Currently, there is a Parliamentary Inquiry into Food and Beverage Manufacturing in Australia few have heard about. No, not the Coles and Woolworths one — a different one.
The Food and Beverage Inquiry terms of reference state:
'The Inquiry will look at opportunities for expanding innovation and value-adding in the food and beverage manufacturing industry in Australia.'
The Inquiry’s report is due to hit Industry Minister Ed Husic’s desk by the end of this year.
This is excellent timing in political policy terms because the Inquiry has gathered together some very passionate stakeholders who plead a compelling case, and just in time for when policies come out for the next Federal Election, due in 2025.
Strong policy in this area would be well-placed to achieve the Albanese Government’s economic and political goals in several portfolios. Additionally, it would likely receive bipartisan support and is therefore a solid policy platform, ripe for the picking by either major party.
In what could be a Cinderella story in the making, if reports suggest correctly, the Australian distilling industry has the potential to be a billion-dollar industry. To be fair, this compelling case was presented to the Government by an alcohol industry association in a 2022 pre-budget submission.
Minister for Industry and Science Ed Husic is sitting on a veritable gold mine in terms of popular policy because the distilling industry is currently, or has the potential to be, inextricably linked with hospitality, tourism, education, environment, agriculture, and trade, largely because of value-adding.
Value adding is basically improving on the original product to increase business. Ways of value-adding might include adding a cellar door to the distillery, or a restaurant; tourist accommodation; creating a tourist attraction; and so on. It has been integral to the success and survival of many in the Australian distilling industry.
In this cost of living crisis, while some are flourishing, many distillers are battling to find their feet and make ends meet and a number have lost their battle and have gone into liquidation. As the number of distilleries continues to increase, the domestic market becomes increasingly crowded and the need for export opportunities becomes more urgent.
The 2021 Excise remission scheme for manufacturers of alcoholic beverages lifted the automatic remission of excise duty from $100,000 to $350,000. This provided some tax relief and encouraged investment, as the Morrison Government intended. Now we see distilleries popping up everywhere as a result and other Federal initiatives to promote industry investment. These initiatives remain in place.
A few years later, we now have a burgeoning and award-winning industry essentially asking for the Government to get its act together, and urgently provide the infrastructure needed to support the investors and distillers because they don’t want to lose the battle.
Given that it was a Government initiative to encourage new participants to the industry by lifting the threshold and keeping it that way, it thus becomes incumbent on the Federal Government to now support those 700-odd, mostly mum-and-dad, businesses with the infrastructure they need for the industry to grow and be competitive. It is not only an economic responsibility, but also a moral obligation.
In the U.S., craft distillers are leading economic growth and outperforming larger distillers as consumer trends shift to craft spirits and tourist experiences. The UK and Europe are experiencing similar industry growth.
Emerging from many Inquiry submissions are some very common themes, collectively forming a compelling case for Federal Government action, including the following.
Excise
Stakeholders have told the Inquiry the legislated alcohol excise is increasing pressure on them and inhibiting demand. It is too high, there are discrepancies in the system, it is indexed too often and resulting costs are too high for the end consumer, they say.
Alcohol in Australia has been taxed since the Alcohol Excise Tariff Act (1921) received royal assent and it is indexed in accordance with the Consumer Price Index (CPI) twice per year.
Of course, any downward pressure on the excise would be eagerly received by both consumers and industry stakeholders alike.
Any initial loss from reducing alcohol excise the Government suffered would be well compensated through other tax measures, such as income tax through job creation and export earnings, stakeholders told the Inquiry.
Staff
Distillers are finding it difficult to source staff because there are few accredited tertiary courses or apprenticeship schemes for distillers and coopers in Australia.
“We've found that we don't really have the skillsets required to understand how some of these distilleries work at scale,” Lark Distilling head of production Greig Ewen told the Inquiry.
Mr Ewen also identified barriers to sourcing staff from overseas because experienced distillers and coopers do not meet the current age requirements for a working visa. Experienced distillers and coopers are generally an older cohort who don’t meet the 18 to 35 age restrictions.
“But there's a problem we're finding with the people of the age that have that seniority and that understanding and experience,” said Mr Ewen.
Trade
Most of these 700 craft distillers are small operators who individually cannot afford to break into the export market in a significant way, nor would they have the knowledge or connections. But collectively they would, with the help of a dedicated body working within existing and new Austrade, education, export and tourism pathways.
Stakeholders told the Parliamentary Inquiry that a dedicated distilling industry body could do for the distilling industry what Wine Australia has done for the Australian wine industry.
Coopering
The opportunity also creates a problem, in that if this does turn into a multi-billion-dollar industry, then they’re going to need a lot of barrels.
Coopering in Australia is a fledgling industry — few barrels are made here.
A considered policy plan would include initiatives that support the coopering industry. This would include tertiary courses; apprenticeship schemes; and long-term sustainable timber sourcing, through plantations of appropriate food-safe timbers that would also offset industry carbon emissions, which would in turn support the timber industry.
The long-term plan for growing the wood, such as Tasmanian oak, for the new coopering industry, could also be outsourced to become an income stream for farmers. That would bring the process from grain to barrel full circle, creating a sustainable industry that will support jobs and the economy indefinitely.
Every which way you look at this, it’s a win-win situation. And what the distilling industry is asking of the Government, in real terms, is quite modest compared to the potential benefits. The difficult part is getting DFAT (Austrade), Home Affairs (visas), Education Department (tertiary courses), Energy (carbon credits), Treasury (Excise), Environment, Agriculture (Forestry) Department, Tourism Department and Industry (Jobs) Department all on the same page. That’s Minister Husic’s job, should he choose to champion this cause.
The Government has first dibs on this one, but either major party could easily seize the policy opportunity.
Let’s hope the distilling industry achieves its potential and gets the fairytale ending they’re dreaming about: a secure and successful industry.
This is part one of a series on the distilling industry. In part two, IA speaks to distillers.
Belinda Jones is an IA columnist and political commentator. You can follow Belinda on Twitter/X @belindajones68.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
Support independent journalism Subscribe to IA.
