Australians love a drink. It's part of our culture and social fabric.
More specifically, Aussies love beer - they are adept at making it and even better at drinking it.
In 2023 the local market was valued at A$36.4 billion with a projected compound annual growth rate of 2.7% between 2024 and 2032.
“People having a beer at their local pub is actually quintessentially Australian,” CEO of the Independent Brewers Association (IBA), Kylie Lethbridge tells Azzet.
Beer brewing is highly taxable and extremely valuable to Australia's economy.
In the 23-24 financial year, independent brewers, which make up just 7% of the total market, contributed around $10.8 million to the local economy and in that same financial year, paid $157 million in tax.
Lethbridge says the industry might seem small, but it is mighty in its contributions.
HOW DOES THE ‘BEER TAX’ WORK?
Excise duty is levied on alcohol other than wine, including beer, spirits and ready-to-drink beverages (RTDs).
It is a form of volumetric taxation where a tax is imposed on domestically produced alcohol at a fixed rate per unit of volume.
Twice a year, the Federal Government indexes the excise duty rates for alcohol in February and August, based on the upward movement of the consumer price index (CPI).
As of yesterday, 3 February, alcohol excise duty rates increased by 0.4%.
This is a significantly smaller step up than the previous increase in August 2024 which was 4.5 times larger at 1.88%.
An Australian Taxation Office spokesperson told Azzet that this means consumers and businesses can expect the amount of tax paid on a 375ml can of full-strength beer to increase by 1 cent and a 50-litre keg of full-strength beer to increase by 31 cents.
Following the announcement last week, Treasurer Jim Chalmers warned pubs not to “dupe” Aussie beer drinkers over the incoming tax increase, which he says amounts to less than a cent per schooner or pint.
While this seemingly small jump is welcomed by the industry, Lethbridge says the Treasurer’s response was “supremely disappointing”, because there is more to the situation.
“We’re not saying that this 1% is going to push breweries over the edge and they’ll either have to close or up beer prices by a ridiculous amount of money. What we’re saying is it's not about the 1% today, it's about twice a year for decades!”

STRUGGLING TO KEEP GLASSES FULL
Australia has the third highest alcohol excise in the world.
In 2024 the excise reached a record high which has put immense pressure on already struggling small businesses.
The IBA represents 600 small to medium brewing businesses in Australia’s beer market. However, due to mounting financial pressures, 46 businesses have entered into voluntary administration, liquidated or closed their doors.
Lethbridge says that while the industry had a boom period where it grew rapidly in a short amount of time, it was also hit with what she calls “the perfect storm” following the COVID-19 pandemic.
Production costs jumped up by 50% in some cases, CO2 emissions increased up by 40%, government support stopped and the cost of living crisis reared its head.
OWNERSHIP
The two major market players in Australia's brewing industry are Carlton & United Brewery (CUB) and Lion - both operated by Japanese conglomerates Asahi and Kirin respectively.
These major international companies dominate pub tap contracts to space on retailers’ shelves.
Lethbridge says concentrated ownership has a lasting impact on independent brewers.
“It’s again a compounding issue, with the vast majority of Australian taps unavailable to craft brewers because they are locked up in deals with the major players,” she said.
IBA roughly estimates that about 20% of tap space is available to independent brewers across the hospitality industry.
According to the IBA in 2023 CUB and Lion held around 85% of the total market share, while Coopers held around 5%.
“It’s a bit of a tough game at the moment… the increase in competition in general has been really high and a lot of businesses are struggling to set themselves apart,” says accountant Adam McWhinnie who works with independent brewers to manage tax compliance and financial forecasting.
And when it comes to paying taxes, small businesses feel it the most.
“The bigger companies certainly wear the line share of these tax increases. However, they have a lot of efficiencies and economies of scale in place that they can manage that a lot better, so the smaller businesses are hit the hardest,” says McWhinnie.

CONSUMERS ARE LESS THIRSTY
Independent brewers produce a premium, handcrafted product that is non-essential in a cost-of-living crisis.
McWhinnie says discretionary spending is down.
“One of the things that drops off the list first when you know times are tough and money is tight is that you won't go out to have a drink,” he tells Azzet.
Another key factor is alcohol consumption in Australia has been declining for almost 50 years in line with considerable progress in reducing problem drinking.
This is ultimately in line with the intentions behind the taxes designed to encourage low-alcohol beer consumption in a bid to reduce or prevent dangerous levels of alcohol consumption.
According to the Brewers Association of Australia (BAA), Australians are reducing their drinking frequency and amount.
BAA found beer consumption per capita has fallen by 30% in 25 years.
Data from the ABS shows that alcohol consumption in Australia peaked at 13.1 litres of pure alcohol per person in 1974-75. Since then it has fallen to 10.5 litres per capita in 2022-2023.
However, Australians still love beer, drinking the equivalent of just over 2.5 billion pints of domestically produced and retailed beer in 2020-21 with a total retail value of around $17 billion.
ECONOMIC VALUE OF A COLD ONE
Australia's beer market prides itself on supporting locally produced products, with over 85% of all beer sold in Australia made in Australia.
According to a 2022 report from the Brewers Association Australia (BAA), the local beer industry generates over $16 billion each year for the economy of Australia across the supply chain.
The industry also creates over 55,000 jobs in liquor-serving venues like pubs and clubs, as well as over 3000 jobs across farms in Australia growing hops, malted barley, fruit and other core ingredients.
The report found that for every job created as a result of the brewing process, another 7.7 jobs are created in the hospitality sector.
McWhinnie says that while tax is a necessary function, increases are not unnoticed.
"So if the price of a beer is to remain the same in a licensed venue then someone somewhere along the way is bearing the extra cost of that and most likely it's the brewer, if they're trying to stay competitive in the competitive market in which they operate,” said McWhinnie.
Lethbridge adds that the solution lies in policy reform.
“We would be over the moon should our government consider helping these small businesses,” Lethbridge says.
This comes as Australia is set to take to the polls on or before 17 May.
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