"Kicking people when they are down" - Wineries feeling the squeeze of new excise tax

"Kicking people when they are down" - Wineries feeling the squeeze of new excise tax

Consumer prices have been going up, including the price of beer and it's having a flow-on effect on excise tax.

This is because excise tax on locally and imported beer, wine or spirits is increased at the rate of the consumer price index (CPI). In 2023, the CPI is sitting at 6.7% down slightly from the biggest increase in 30 years in 2022 at 6.9%.

Te Whare Ra Vineyard and Winery which spans a whopping eleven hectares is home to the oldest vines in the Marlborough region and seven different vine varieties.

Anna Flowerday and her husband Jason own Te Whare Ra and Anna told REX host Dominic George it's frustrating to see another excise tax slapped onto beer, wine and spirits.

"That's all levied at the producer, it's a direct cost to us," she said.

Flowerday particularly highlighted the impact the additional taxes are having on smaller vineyards and producers who only sell to domestic markets.

"A lot of small wineries would be in the same boat as us, that's about half the membership of New Zealand wine growers are wineries who only sell in domestic markets.

"I think with those big increases with everything that we are seeing with wage rises and all of our costs, it's pretty challenging."

A report from 2022 suggested some wineries were paying more in excise tax than the cost of growing the grapes, which Flowerday agreed is just about the situation for some growers.

She highlighted that a  number of domestic wineries are feeling concerned about increasing their retail prices for fear of losing sales.

"A lot of people might be thinking 'I can't change my prices because I'm worried I might lose my customers', so they are just having to absorb it."

Flowerday explained that the same industries in Australia are being treated much more favourably by their Government and proving that there are alternative systems that will benefit local growers instead of putting more pressure on them.

"They call it the 'wet tax', but they've got a threshold that if you would have to pay under that you actually get it back, they have a rebate scheme.

"People reinvest that in their businesses, they've got incentives at the moment they're handing out tourism grants to build cellar doors, I think a lot of people would probably look at it and go was I right to set up here?"

With extra added costs like label changes and a pregnancy label colour change, she told George it feels a bit like a bit of "kicking people when they are down."

Flowerday went on to talk about the inability to invest in new staff due to cost increases, the extra work it creates for a job that is already extremely demanding and how the oldest vines in Marlborough are faring at their winery.