Brewers seek tax relief for lockdown stale beer

The New Zealand Brewers Association has written to the Customs Minister Jenny Salesa to request a refund on excise paid on beer that has gone stale under lockdown.

This could amount to 15,000 kegs or $10 million of beer. While this is only an estimate, the losses for large breweries that sell to pubs and other hospitality businesses could be substantial, association director Dylan Firth said.

Excise on beer is determined by the percentage of alcohol but Firth said a 50 litre keg of 5 per cent alcohol beer attracts about $75 excise or $1.50 a litre.

Beer that leaves a brewery becomes eligible for excise and despite some beer being returned to breweries in the two days before lockdown began, thousands of kegs are still sitting in businesses that have closed.

If kegs continued to be refrigerated, the beer might still be able to be sold. But many businesses would have turned off power to save money, Firth said.

Owner of Three Boys Brewery, Ralph Bungard said he had 100-200 kegs in bars and restaurants that he would be looking to get back at the end of lockdown.

‘‘A lot depends on how the beer has been stored. If it’s a month and it has been stored well that’s not a problem ... they will still be able to sell that beer,’’ he said.

Lion Breweries national sales director Guy Blaikie said he did not know how many kegs might need to be dumped after lockdown and had been unable to retrieve the majority of kegs beforehand.

The brewer was seeking a refund on the excise for any beer that would need to be dumped, Blaikie said.

On average Lion paid $300m a year on excise across beer, wine and spirits.

The restrictions had been a massive blow to the hospitality and brewing industries and it was supporting its customers by providing credits for untapped kegs, extended credit and customised payment plans to help them get through, Blaikie said.

The association sent a briefing to Salesa to ask that breweries get refunded on excise paid on stock that will be destroyed. At present, refunds can only be made on stock that does not leave the brewery. The association has asked that it be extended to stock that breweries bring back in.

‘‘It’s pretty reasonable. The whole idea of an excise is that it’s a consumption tax for negative effects,’’ he said.

Salesa said she had received the request, which was ‘‘quite technical’’. The Government was exploring options to support businesses at this time, she said.