Friday, July 31, 2009

Less alcohol in the beer, less cocoa in the chocolate...

Fosters calls it Australia's favourite full-strength beer, but VB, or Victoria Bitter as it is properly known, will soon scarcely deserve the title.

Two years ago Fosters trimmed its alcohol content from 4.9 per cent to 4.8 per cent. Within days it will cut it again, this time to 4.6 per cent.

It's nothing to do with "responsible consumption," the justification used by confectionery makers to cut the size of their chocolate bars, it's because of a sly and steadily-escalating tax introduced by the Hawke government during the 1980's to take the heat out of Budget night.

Before then legislated increases in the excise levied on beer, spirits and tobacco were greeted with regular headlines reading "Beer, cigs up".

The new arrangement automatically lifts the excise rates each February and August in line with a a formula built around the consumer price index.

It forces the manufacturers to either put up their prices every six months or to cut the amount of alcohol or tobacco in their products.

The next increase, to apply from Saturday, should add around 2 cents to the price of a six-pack and 8 cents the price of a slab according to the Tax Office.

But it won't for VB. Fosters is freezing the price of VB and several of its premium brands, and instead cutting further the amount of alcohol in each bottle of VB.

At 4.6 per cent, so-called full-strength VB will have about 4 per cent less alcohol than it used to, on the face of it more than enough to offset what would have otherwise been a 2 per cent price hike.

But Fosters spokesman Troy Hey says other costs have gone up as well including glass and hops.

It'll do no good switching to Melbourne Bitter. It's already offering just 4.6 per cent, as is Tooheys and Carlton Draft. Crown Larger stands nearly alone in still offering 4.9 per cent although it's eclipsed by Coopers, whose Sparkling Ale still contains 5.8 per cent.

How will you know whether you're getting the the old "full-strength" VB or the new one?

For a while both will be on sale until the old packets sells out. Mr Hey says the new packaging will be "slightly different" and accompanied by a new advertising campaign. But the campaign won't explicitly mention the lower alcohol content. That'll be left for a customer examining the fine print on the bottles and cans in the liquor store fridge.

The Tax Office expects the price of a six-pack of light beer to climb just 1 cent, and the price of a six-pack of alcopops to climb 5 cents. A pack of 50 cigarettes will cost an extra 8 cents.

Published in today's SMH

"The Australian Bureau of Statistics released the Consumer Price Indices for the June Quarter 2009 on 22nd July. This resulted in new rates of duty on spirits, beer and tobacco. The new rates take effect from Saturday 1 August 2009 and will be published in the Government Notices Gazette on Wednesday 5 August 2009.

Below are some examples of the increase in the excise duty component for specific products.

Excise Duty Component

Product Current New Increase

375 can light strength beer (2.7%) 20 cents 20 cents No change
280ml glass light strength beer (2.7%) 3 cents 3 cents No change
375 can full strength beer (4.9%) 57 cents 58 cents 1 cent
280ml glass full strength beer (4.9%) 30 cents 30 cents No change
375ml ready to drink spirit (5%) $1.30 $1.30 No change
30ml nip of Brandy (37.5%) 73 cents 73 cents No change
700ml bottle of other spirits (37.5%) $18.15 $18.26 11 cents
Pack of 25 cigarettes $6.42 $6.46 4 cents
50 grams Tobacco $16.05 $16.15 10 cents

Please note: The actual price of these products is also dependent on production costs, market factors and the Goods and Services Tax."