Australia Moves To Tighten Definition Of 'Beer' With New Regulatory Standards

The Australian government is planning to introduce strict rules that define what can be called "beer," potentially reshaping the country's beverage landscape.

Under the proposed changes, only drinks meeting a narrow set of criteria -- including a bitter taste, mid-to-low alcohol content, and characteristics derived from fermented grains -- will qualify as beer, reported 9News.

In Australia, brewed beverages such as beer are taxed less, while compared to other alcoholic drinks to encourage people to consume low-alcoholic products.

The Tax Office redefining the term for "beer" might result in higher taxes on brewed beverages such as lagers, ginger beers, and seltzers. Since only beers brewed traditionally would be eligible for lower tax rates, the change could affect craft brewers and result in higher costs at pubs.

Kylie Lethbridge, chief executive at the Independent Brewers Association, said the move will bring craft brewers' viability into question. "The last nail in the coffin for our small independent craft brewers in Australia," she said.

Furthermore, the Australian government's strict definition of beer will also have significant tax implications for local brewers, as it influences the industry pricing.

Australian beer has a substantially lower alcohol tax rate (AU$2.22-AU$36.68) per liter than spirits and pre-mixed drinks (AU$58.48-AU$66.67 per liter). About 38% of the AU$6.9 billion collected from excise taxes in 2019 came from the AU$2.6 billion generated by the beer excise. Beer prices will rise as a result of an upcoming tax increase, reported the Sydney Morning Herald.

Lethbridge fears the ATO's decision will increase prices for seltzers, ginger beers, flavored brews, and craft beers, limiting affordability for pub goers.

"We feel a bit like we're in the firing line, this will have a significant impact for a number of brewed products that are beer, even outside of seltzer," she added. "Aussies who want to go out, want to meet people ... want to go out to the local pub, have a couple of beers, it's just almost becoming unaffordable," she said. "Particularly when you've got the cost of living crisis overlaying that."