Recent economic modeling unveiled today suggests a bright future for Australia’s spirits industry, with projections indicating its potential to burgeon into a formidable $1 billion powerhouse. However, the realization of this ambitious forecast hinges crucially on the implementation of appropriate policy frameworks.
The Spirits Industry Competitiveness Plan, meticulously crafted by research firm Mandala and commissioned by the Australian Distillers Association alongside Diageo Australia, illuminates a promising trajectory for spirits akin to the success witnessed in Australia’s esteemed wine industry. Yet, formidable barriers in the form of governmental policies and regulatory hurdles, notably the imposition of high excise taxes, threaten to stifle the industry’s growth.
Chief Executive of the Australian Distillers Association, Paul McLeay, emphasized the profound implications of Australia’s spirits tax on industry competitiveness and investment allure. McLeay articulated the urgent need for policy reform, highlighting the inhibitive nature of the current excise regime on distilleries’ expansion prospects and job creation potential, particularly in regional areas.
Despite the industry’s substantial domestic footprint, boasting 5,700 manufacturing jobs, with nearly half of the nation’s 701 distilleries situated in regional locales, and emerging as a burgeoning tourist attraction, the export landscape remains underdeveloped in comparison to international counterparts, signifying untapped growth opportunities.
The report underscores a critical juncture where concerted governmental intervention could pave the path for unlocking the full export potential of Australian spirits. Key recommendations include halting biannual increases to spirits tax and establishing a dedicated ‘Spirits Australia’ body to foster industry growth, propelling the sector from a $210 million export market in 2022 to a projected $1 billion by 2035.
Dan Hamilton, Managing Director of Diageo Australia, echoed sentiments of constrained growth due to prevailing policy constraints, urging the government to alleviate the burden of exorbitant spirits taxes, which not only burden consumers but impede foreign direct investment crucial for industry expansion.
Moreover, proactive policy interventions, as outlined in the report, have the potential to catalyze significant economic contributions, generating an estimated $111 million in direct economic value and fostering nearly 878 new full-time jobs, with a notable emphasis on regional employment opportunities.
In light of these findings, Mandala’s Managing Partner, Amit Singh, underscored Australia’s latent potential in the global spirits market, stressing the imperative for policy reforms to elevate the nation’s spirits exports to parity with leading counterparts, a trajectory that could see Australia export $1 billion annually by 2035.
As stakeholders converge on the imperative of policy reform, the report signals a pivotal moment for Australia’s spirits industry, poised to transcend current limitations and realize its full economic potential on the global stage.
