Grin and beer it - the price is going up

05:26, Feb 14 2009
Cold comfort: News the price of alcopops could drop doesn't carry much weight with beer drinkers.

Beer and spirit drinkers are likely to have to dig a bit deeper for their favourite tipple from July 1 when alcohol prices are expected to rise 5-10 per cent.

However, wine and pre-mixed spirits drinkers may fare better, with prices in those categories expected to remain static or even fall in the short term.

The government's excise tax on booze is raised by the same amount as the consumer price index (CPI) each year, with the annual increase taking effect on July 1.

But many liquor suppliers also use that date as a trigger-point to make broader price adjustments to recover rising costs in other areas.

And the liquor industry, like many other parts of the economy, has been struggling with a range of rising costs.

Nick Hern, the managing director of Vintage Wines and Spirits, a national distributor of alcoholic products to the retail and off-premise trades, said transport and distribution costs, his company's biggest expense after the cost of stock, had risen about 15% over the past two to three years, but the company had so far absorbed the extra expense.


"It's quite alarming how things have gone up, like the cost of running a sales force, petrol for their cars, the cost of mobile phones and every other bloody thing," he said.

On top of that, the cost of imported products, such as spirits, was going up because the exchange rate had finally started falling.

Hern expected the price of most types of alcohol to rise an average 5% to 10% after July 1.

The only bright spots on the price front were the exceptionally bountiful grape harvests in Australia and Marlborough this year, which had resulted in extremely large vintages.

That would help keep a lid on wine prices, Hern said.

At the retail end, Stephen Fromont, the general manager of national liquor chain The Mill Liquorsave, is also bracing for price rises of 5-10% after July 1.

Most of the major liquor suppliers, such as Lion and DB, had indicated prices could rise significantly on July 1, he said, although he has yet to see details.

"At this stage all manufacturers are indicating they will have price rises above the CPI, which is currently 3.4%," he said.

The only exception to that could be the cost of what are known in the trade as RTDs (short for ready to drink), pre-mixed spirits-based drinks popular with younger drinkers.

Many of the RTDs sold in this country are made in Australia, and a surprise move by the Australian government a week ago to double the excise tax on RTDs had caught the industry by surprise.

Many of the large suppliers of RTDs in Australia were left with too much stock and Fromont was worried they could try to solve the problem by dumping their surplus on the New Zealand market, which would cause prices to fall.

That could see young people who favour such drinks paying less for them, while older folk who prefer a glass of beer or whisky at the pub will have to pay more. 

Sunday Star Times