More on wine prices – Europe v Australia

11 thoughts on “More on wine prices – Europe v Australia”

  1. Niall says:

    I think the “close to 95% of wineries pay no WET” is a red herring in terms of consumer wine prices. If 95% of retail spend on Australian produced wine had no WET, there’d be no point in maintaining the WET scheme for domestic producers. It’d be easier to help out small producers by just scrapping WET on domestic wine, rather than run a convoluted and rorted rebate scheme.

    Also, as Huon said about importer margins, percentages have an extreme effect on expensive wine. So if you wanted to buy a high end bottle of wine at $100 from a larger winery that makes a lot more than $1.7m in sales and is hence paying WET, then the WET is adding something in the order of $30 to the price of the bottle. Taken to its extreme, consider the WET component of a bottle of Grange. I can’t see how Penfolds would escape having to pay WET without some kind of dodgy accounting.

    Anyone who works to bring in interesting wines and cut out the middlemen that probably don’t even know what it is they’re importing gets my vote. I’ve been enjoying the tastings at Prince Wine Store in Sydney, very glad they opened up here.

  2. Huon Hooke
    Huon Hooke says:

    Darshak: WET is applicable on all wine imported into Australia. I believe the two litres they allow you at Customs in airports is the threshhold. You must have been plain lucky with your South African case!

  3. Bryan says:

    Happy to pay WET as long as rebate is completely abolished! The rebate is fraudulently claimed by many companies set up with the only purpose to claim the rebate, it is unethical business practise, distorts the wine market, millions of taxpayers funds are paid to NZ companies, Woolies, Coles and other retailers. In short is broken and corrupt, collect the tax and give no rebate, profitable businesses will survive and fake businesses will collapse; a win, win for all.

  4. Wayne Ahrens says:

    WET was not introduced to protect Australian winegrowers but to protect the Australian Government tax revenues. The GST was meant to replace a whole range of taxes but the loss on alcohol was going to cut too deep so the WET and other alcohol tax regimes were cooked up to fill the shortfall. A better system would be a volumetric tax on alcohol to address the harm caused. Tax in wine producing nations in Europe is a matter of internal politics and how wine farming is seen as part of the farming block which attracts subsidies across the board.

  5. JR SERISIER says:

    Just wondering who it is who benefits from the WET rebate?
    I read a report recently that over 80% of Australian grape growers (and small wineries?) don’t make a profit…so it can’t be them. Or if it is them, the rebate certainly isn’t helping much!
    Studies of ‘agricultural subsidies’ paid in America indicate that the main beneficiaries are larger, corporate ‘agribusiness’ firms…not small ‘family’ farmers.
    If that holds true here in Australia with the WET, then it’s likely that the main beneficiaries of WET rebates are the big wine companies/ brands.
    Whoever it is, it seems fair to say that the Aussie wine market is far from free and fair.

  6. GI says:

    Easy answer – don’t buy overseas wines – support our local producers!

  7. Rick Burge says:

    JR , not quite right on the WET. Before the GST was introduced, the sales tax on wine was 41%!!
    Because the GST was only 10%, the Howard government were going to loose a hefty margin, so they introduced the Wine Equalisation Tax to secure what they previously had been getting. It is a grossly unfair tax because the GST becomes a tax upon a tax – where you have 29% at the first ‘mark-up’, then 40 – 50% retailer margin, THEN 10% at the end. Naturally it is worse when 200 – 300% mark-ups are used in restaurants.
    Rebates were granted to small producers which I’m in two minds about – it doesn’t encourage exports ( because you don’t get that extra 29% ) and it’s being rorted by Kiwi producers and dodgy Aussie middlemen who sell wine to each other and claim WET if they can show they are small enough.
    The Government started it, the carpet-baggers have taken rorting it to a new high!

    1. Huon Hooke
      Huon Hooke says:

      A comment on Rick’s post: the WET rebate goes to all wineries regardless of their size. But it is capped at the first $500,000 (at wholesale value) of a winery’s WET liability. It obviously means more to small wineries than large because the rebate can mean they pay little or no WET tax. “The rebate effectively exempts over $1.7 million of wine sales per producer from WET each year and results in close to 95 percent of all wineries effectively paying no WET.” (from the Treasury web-site)

      1. JR SERISIER says:

        Thanks Rick for the clarification. Other comments from Wayne, Bryan and Huon are also informative.
        Huon posted an earlier piece some time ago about the ‘brands’ being marketed by the big supermarkets…are these wines attracting the WET rebate?
        Broken and corrupt seems to be a fair comment!

  8. Darshak says:

    Is the WET applicable on private imports or commercial imports or ALL imports of wine regardless of quantity?

    I ask as 12 years ago I did import a case (12 bottles) of wine into Australia from South Africa and I was not charged any WET.

    Appreciate a clarification!

  9. JR SERISIER says:

    Excise rates on still wine in Austria, Germany, Greece, Hungary, Czech, Italy, Portugal, Spain are…NIL, ZERO, NOTHING.
    The high price the consumer pays for imported wine in Australia is the WET…a cost associated with protecting Australian winegrowers.

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