Wine and cider-makers rejoice – beer consumption continues to fall due to high prices

The popular image of Australians drinking an ice-cold beer could soon be replaced by them sipping a glass of shiraz, according to new research.

Australia’s beverage of choice appears to be changing, as figures from the Australian Bureau of Statistics show a further shift away from beer and toward wine.

In 2011-12, beer production was down 2.3%, while wine rose by 1.9%.

Despite the shift away from beer, it narrowly remained the most popular beverage, with beer making up 41.2% of total consumption and wine 37.8%.

But the figures don’t communicate the whole story: the surge in wine’s popularity started 30 years ago and it comes down to taxation.

Foundation of Alcohol Research and Education director of policy and research Caterina Giorgi told SmartCompany drinkers are buying more wine largely because it’s cheaper.

“Wine is the more affordable alcohol product because of the way it is taxed and you can purchase it for as cheap as 22c a standard drink,” she says.

“The tax on beer and spirits goes up twice a year and it’s based upon the alcohol volume of the drink. Beer has eight different rates, but spirits just have one,” she says.

Giorgi says beer can currently be taxed at up to $45 per litre, while spirits can be taxed at up to $75 a litre.

“Wine is not taxed on its alcohol content, it’s taxed upon the wholesale value, so the cheaper it is to produce, the less tax you pay and according to IBISWorld, 60% of bottled wine retails for $8 or less,” she says.

“Wine is taxed at 29% of the wholesale value, there is no increase and there is a hefty taxpayer-funded subsidy … people who produce up to $1.7 million a year in wine don’t pay any tax at all,” she says.

Giorgi says this has resulted in accusations of large wine companies rorting the system to try and claim the subsidy.

Other factors influencing wine’s growing popularity is its easy availability and higher numbers of female drinkers.

Other types of drinks performing well include cider and craft beers.

There has also been a massive spike in cider production in recent years, with people now consuming 0.2 litres of pure alcohol from cider compared to 0.06 in 2007.

According to IBISWorld figures from 2012, cider now accounts for 7% of the market and craft and boutique beer now makes up 5%.

“The move toward craft beer shows younger consumers are looking more at image and are interested in buying different products in different places,” she says.

“While wine is as affordable as it is, it will continue to dominate the market, but we will also continue to see an increased consumption in craft products and ciders and beer and sprit producers will need to continue to innovate so their products to attract consumers.”

The decrease in beer sales has caused some brands to rethink their products, with VB boosting sales by returning to a 4.5% alcohol content and Cascade changing the flavour of its beer.

Overall, consumption of alcohol has fallen for the second year in a row. In 2011-12, Australians drank 1.4 million litres less than in 2010-11 and 2.7 million litres less than in 2009-10.

The ABS estimates each person over the age of 15 consumed approximately 10.1 litres of pure alcohol.