1) There’s less alcohol to hide brewing errors so the brewer really needs to be on their game.
2) From a drinker’s perspective, you can enjoy a few mid-strengths without getting sqwiffy.
3) From a brewer’s perspective, a punter can drink more of a mid-strength beer than a full-strength. Which equals more sales for them.
4) It’s still an untapped market. While some brewers have woken up to the neglected lower end of the beer spectrum, most seem to want push the alcohol envelope in an upwards direction and not a downward one.
One reason I never thought of was to do with excise tax. And that’s because excise tax is bloody boring. As a beer geek I tell myself that I should learn about it because it’s why we pay more for beer than in the good old US of A, where beer tax is way lower. But on the other hand, we have universal health care, which that tax probably pays for, so I won’t whinge too much.
But yeah, excise tax – frigging boring (unless you’re Liam from Drunken Speculation. He loves this economics shit). Brewers hate it – it’s a waste of a good Sunday night as they sit down and do their tax sums. Every single Sunday, so I’m led to believe.
For reasons I cannot explain, I found myself looking at the excise tax rates on the ATO website (truly, I have utterly no idea why the hell I was there. Maybe I was looking for reasons to be glad I wasn’t a brewer. Who knows).
I was looking at the rates and saw how much the excise is for a beer between 3 and 3.5 per cent. Put it in a keg 48 litres or over and the brewer pays $25.73 tax. Go over 3.5 per cent, put it in the same container and the rate almost doubles to $47.85.
That’s a difference of $22.12 on every keg. So if you make a 3.5 per cent beer you save yourself $22 on every keg – and can still probably sell the beer at the same price as a full strength. So you’d also be increasing the profit margin.
While I was on the ATO site I found some other interesting beer-related info. Which I’ll pass onto you because, hey, like you’re ever going to be bored enough to look up beer excise rates.
According to the ATO, beer cannot have more than 4 per cent by weight of sugars. Nor can it contain any artificial sweeteners (good luck trying to brew with Stevia) and has to have an alcohol count of 1.15 per cent. Which, of course, means a beer below 1.15 per cent would be excise free. Which makes me think the main motivation behind Hahn Ultra (which clocks in at 0.9 per cent) was not to provide a ‘‘healthy’’ alternative but rather to save a bomb by launching a product that was excise-free.
Categories: beer business