Why is the cost of local gin expensive in Australia?

One of my flatmates’ biggest complaints about living in Australia is the cost of alcohol. He constantly reminds me of the fact the alcohol in Europe is far cheaper and that he feels it is a crime to pay exorbitant amounts for a top-shelf spirit.

He has a fair point. Have you ever wondered why that might be the case?

It all comes down to the Australian excise tax rate. The tax on alcoholic spirits is roughly $81.05 per litre of 100% pure alcohol.  Most Australian gins have an alcohol concentration of approximately 40%, equating to $22.94 of tax per 700ml spirit bottle… not to mention the GST payable on that!  That’s right, GST is payable on excise tax which equates to approximately $25 of tax per 700ml spirit bottle.

This tax doesn’t include the GST payable to the ATO for the supply of the goods. All in all, approximately $30-$35 of every 700ml bottle of Australian gin that you purchase goes towards tax and not the distillery.

On top of that, you would have to consider the overheads such as rent, utilities, materials and payroll – especially where employee wages here in Australia are much higher and more tightly regulated than overseas.

Put that all together and you can understand why a locally crafted bottle of gin costs far more than your standard international brand. Not only do they mass produce their bottles, but they can also charge a lower price and still make considerable profits with the volume of sales. Take the US for example, our excise tax is close to 50 times higher than theirs.

You may ask what about beer… or even wine?  It all comes down to the percentage of alcohol in your product and the different streams of excise tax. Distilleries pay up to 10 times more tax than a winemaker.  

This is one of the reasons why Disti was created. We understand that local small batch distilleries can sometimes find it difficult to compete with international brands, given their entry price points in the market, not to mention consumer familiarity with the big brands.

The local Victorian craft gin market is astonishingly collaborative, with each distillery wanting the other to succeed and help uplift our local industry as a whole.  They understand how difficult it is to break into the market that is already heavily dominated by the more famous international brands.

If you are looking for a bottle of gin for this festive period, support Australian and shop through Disti. We are your portal to local Victorian small batch distilleries.