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On-trade spirits sales in Australia drop 7.7%
In the wake of inflation and bi-annual tax increases, on-trade spirits sales in Australia have declined by 7.7% in the 12 months to May 2024.
Data from the latest CGA by NIQ Consumer Pulse Report found that 43% of consumers were going out less than usual due to the cost-of-living crisis.
In addition, CGA’s On Premise Measurement (OPM) service showed that prices for a 30ml serve of spirits have gone up by 93 cents or by 8.7%. Since the start of 2022, prices for spirits have risen by 11.8%.
After the upcoming hike on spirits duty (5 August), bargoers will have to pay AU$1.25 (US$0.82) in excise tax for a whisky on the rocks.
Together, CGA attributed these factors as the cause of Australia’s 7.7% decline in on-trade spirits sales by volume in the 12 months to May 2024.
James Phillips, CGA by NIQ’s client solutions director – total liquor, Australia and New Zealand, said: “High inflation, the ongoing increases in alcohol taxes and pressure on consumers’ spending are creating a very difficult trading environment for many pubs, bars and drinks suppliers.
“In line with global trends, the spirits category has been hardest hit, with steep tax rises and people’s desire for value leading some of them to other categories or keeping them away from the on-premise altogether. With more tax increases imminent sales are likely to remain under pressure for some time, and spending will be increasingly polarised between premium and value drinks.
“With this in mind it’s more important than ever to understand the nuances of sales trends and identify the opportunities for growth.”
In its breakdown of prices and sales, CGA revealed whisky and Tequila have been hit the hardest by Australia’s inflation, with 10.1% and 9.2% year-on-year price rises respectively. Furthermore, lower-priced spirits such as vodka and gold rum are doing better for year-on-year sales than the spirits category as a whole, which indicates consumers are after more value.
CGA previously revealed that volume sales of spirits in Australia’s on-trade fell by 8.1% in the year to 26 March 2024, driven by a decline for gin.
The next CPI for spirits – to go up by 2.% – will happen on Monday (5 August). CGI confers that on-trade sales are likely to be further challenged by this latest hike.
Leading figures in Australia’s spirits industry have recently called the tax ‘completely absurd’ and stressed that it can ‘no longer be justified’.
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