Keeping Local Alive With Australian Craft Spirits

Here at D’Marge, we are big fans of the craft spirit revolution happening in Australia. Whether it’s a Tassie single malt, gin from the Yarra Valley or rum from Bathurst, we are truly of the mind that if you want to think local, you’ve got to drink local.

However as Sam Casey explains, the growth of world’s best craft Aussie booze is being held back by the heavy hand of the Federal government’s tax collectors, and there’s appetite for change.

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Spend enough time with them and you will hear whisky makers both agonise and laugh at the “angels’ share” – a quaint term used to describe the loss of whisky by evaporation through the porous wooden barrels which hold their precious drop.

They’re a thirsty bunch the angels; it’s estimated that each year they take a whole two per cent of volume from the millions of barrels of whisky stored all over the world.

But for the burgeoning craft spirits industry here in Australia, the angels are not as a great a concern as the demons which haunt the industry in the ghastly form of tax.

Like fine wine and craft beer before them, Australian spirits are making the old world sit up and take notice. Four Pillars gin, produced in the Yarra Valley, was awarded double gold at the prestigious 2014 San Francisco World Spirits competition, and a Tasmanian whisky, Sullivan’s Cove, was named as the world’s best single malt at the 2014 World Whisky Awards.

Despite their success, craft distillers are burdened with a tax regime which their small grape growing and beer brewing cousins have escaped – micro-brewers and small winemakers enjoy generous rebates on the tax they pay, however craft distillers are forced to compete with international, mass produced products with a very large tax monkey on their back.

Four Pillars head distiller Cameron MacKenzie believes that with the right conditions, the future is bright for craft spirits in Australia.

“I was astounded to find that 95 per cent of gin consumed in Australia was imported. The tax structure doesn’t help – craft sprit production in Australia is taxed at a ridiculous level. Having said that we are seeing some fantastic Australian spirits starting to emerge and there’s no reason we cannot build a significant domestic industry and take on the world,” MacKenzie said.

For example, for every bottle of gin they sell, Four Pillars makes a profit of around $10. The taxman, however, gets $30. It’s a similar story for other producers.

This hurts the producers’ ability to grow, to employ more staff and to compete internationally. It also limits the ability of Australian drinkers to enjoy a local drop.

Keeping the local local

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Four Pillars Distillery

Bars like Melbourne’s Bad Frankie are trying to do their bit to add a healthy measure of patriotism to the neighbourhood local by only stocking Australian products behind the counter.

Bad Frankie’s Sebastian Costello saw a big opportunity in exploiting the growing demand for locally produced, craft products.

“I travelled to Bourbon county, Tequila, Cognac and the highlands of Scotland and the best thing about drinking there was that it was the local drop made by the local people. It was the culture,” Costello said.

“In Australia we have a wonderful new culture of amazing craft spirits made by people who don’t make them like their father or their father’s fathers, they make them just the way they want to.”

Freeing the spirit

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Starward Distillery Floor

In the wake of the collapse of the icons of Holden and Ford, there has been a lot said over the past year about the future of Australian manufacturing; indeed whether or not it has a future at all. We will never be able to compete with the heavy manufacturing behemoths of Korea or China and should not presume to do so.

The truth is Australia needs to play to its strengths, and to the remarkable moment in which we find ourselves. Perched on the doorstep of history’s largest, and biggest spending middle class, it is our good food, our fine wine, and increasingly our craft whiskies and gins and vodkas which will take pride of place in bars, restaurants and living rooms in cities like Shanghai and Guangzhou and Beijing.

To truly realise the potential of craft spirits in Australia will require Treasurer Joe Hockey to give craft distillers the same rebates which have allowed small winemakers and brewers the opportunity to grow, to create jobs and to take Australia to the world.

I’m sure we all hope Mr Hockey can appeal to his better angels.

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