5 Jul 2010

Rising excise duties difficult for wine industry

5:59 am on 5 July 2010

A squeeze on the wine industry continues to tighten with producers saying it is getting increasingly harder to absorb rising excise duties on wine.

The Government lifted the excise duty on domestic wine sales by 4 cents per bottle this month, bringing the rise in excise charges to almost 12% over the past five years.

New Zealand Winegrowers says a survey of more than 170 of its members has found that most won't be passing this increase onto consumers.

Chief executive Philip Gregan says the survey shows that close to half of wineries have not passed any of the increase in excise tax in the last five years onto consumers.

But he says it is getting to the point where they won't be able to absorb any more costs because most wineries are already suffering financially.

He says the excise has morphed into a tax on winery income, which is hurting profitability in the industry.

Mr Gregan says winegrowers believe the market place will not accept price rises at the moment and retailers will refuse to stock their wines if they raise the price.

He says trading conditions for the wine industry are the toughest for 20 years and any more cost increases may force some wineries out of business.