Fears some wineries won’t survive

If you’re looking for a Dry July incentive, then here’s one – the cost of alcohol is set to climb due to a major tax increase.

The Government’s lifted the alcohol excise tax by 6.9 percent, the biggest rise in 30 years. And there are fears some wineries won’t survive.

Kumeu River Vineyard marketing director Paul Brajkovich’s family have been making wine for nearly 80 years and this latest tax hike is a big blow.

“That’s quite a major one, so yeah I was quite shocked,” he told Newshub.

From Friday, the nearly 7 percent tax increase is applied to all alcohol sold within New Zealand.

“Wineries will add that to their cost of the wine,” Brajkovich said.

Wineries are now paying more in excise tax than what it costs to grow the grapes.

“It goes straight off the bottom line,” Brajkovich added.

Which has the winegrowing industry fearing the worst.

“It absolutely could be a nail in the coffin for some small wine businesses… it will affect the viability of some of our small winery businesses, there’s no doubt about that,” NZ Winegrowers Association chair Clive Jones warned.

The excise tax rise is separate to GST, and applies to all alcohol.

“We simply can’t afford to absorb the cost anymore. It has to be passed on,” Jones said

That means passed on to consumers.

“We’re thinking at least a dollar a bottle, at wholesale price, which then has to have a margin put on it by us to make some money,” said Restaurants Association Chair Mike Egan.

Alcohol prices are expected to rise across the board – from supermarkets to restaurants.

“Some have got no choice but to try keep their head above water and add the price on for the customer,” Egan said.

The cost of alcohol is unlikely to go up overnight, but in a month or so you will be reaching deeper into your pocket.

“It’s wine today, maybe cheese tomorrow and milk the day after. Where are they going to draw the line?” one Kiwi told Newshub.

Alcohol – the latest in a long line of products being hit by inflation.

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