Drinkers hit in pocket by rise in excise rate

Consumers will end up paying for a nearly 5 per cent increase from tomorrow in beer, wine and spirits prices.

The Government's excise on alcohol will rise 4.55 per cent, and bars, restaurants and liquor stores are expected to pass on the extra cost.

"They have to," said Hospitality Association Nelson Marlborough branch president Ron Taylor. "The end user is going to have to pay."

Distilled Spirits Association chief executive Thomas Chin said the new tax rates meant 73 per cent of the retail price of a standard bottle of spirits, such as whisky, run, vodka and gin, would go to the Government in some form of taxation.

"Not many consumers are aware just how big the Government's impact on spirit prices is. Nearly three-quarters of the cost of every standard one litre bottle of spirits goes directly to the Government, with the remaining quarter divided between the brand owner, distributor and retailer," he said.

The excise rate is calculated from inflation for the year ending March and applies from July 1.

"The smart thing for those who enjoy a drink would be to rush out and buy at today's price," said Mr Chin.

The recommended retail price of a standard bottle of spirits from tomorrow would be $34.99, he said.

The increase came at a tough time for anybody in the hospitality industry as they went into the winter season, and it was just a further disincentive for people to go out and spend, said Mr Chin.

A bar or club that still had to meet fixed costs might offset that by reducing staff hours or jobs, he said.

While the Government's rationale for the excise was that it required more revenue, particularly for rebuilding Christchurch, putting up prices might reduce demand and potentially the Government could get less revenue, he said. In response to the idea there was a public health argument for putting up alcohol prices to address problematic drinking, Mr Chin said: "My answer to that is the people they want to target are heavy drinkers and they will carry on their behaviour."

The Government could stop the excise increase but the association accepted that was not going to happen, said Mr Chin.

Excise increases have spurred more Nelson people to make their own spirits, wine and beer.

Bin Inn Richmond owner Carolyn Norgate said every time there was an excise increase, her store sold more stills, beer kits and wine-making gear.

In the 3 1/2 years she had the store, the number of customers buying home brew ingredients had grown 50 per cent.

"More people are brewing because it is a lot cheaper than buying."

She said she could make one litre of spirits for $11, making beer cost on average 78c a litre, and for those with access to fresh fruit it could cost $10 for 23 litres of wine. Home brewers could not sell what they made; it was only for personal consumption.

In Nelson, average bar prices are from $6.50 for a glass of house wine, $6 a beer and $7.50 for spirits.