Jos Ruffell: Garage Project co-owner on smaller excise tax to support the brewery industry

A new report has found that beer makes up almost 1% of our country's GDP.

Brewing accounted for $3.6 billion of our GDP last year and 1.3% of the national workforce is employed in the brewing industry, but alcohol excise duties often outpace inflation, and this is having an effect on the industry.

Garage Project co-owner Jos Ruffell is calling for smaller hikes in excise tax to support the industry. 

"Our single largest ingredient cost each month is excise tax to the government," he said. 

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Episode Transcript

Speaker 1 (00:00):
Where business meets insight of a business hour with Ryan
rich on News Talks MB. Good evening, it is six
after six. Great to have your company tonight. Jason Walls
raps the political week for us shortly. We're in Hong
Kong with the Asia Business Report, and our UK correspondent
Gail Downey joins us before top of the hour. Right

(00:21):
now if you might be sitting down actually to enjoy
a cold brew yourself, So this is great timing. A
new report has found that beer makes up almost one
percent of our country's GDP. Brewing accounted for three point
six billion dollars of our GDP last year. One point
three percent of the national workforce is employed in the

(00:42):
brewing industry, but alcohol excise duties often outpace inflation, and
this is having an effect on the industry. Josh Ruffle
is the co owner of award winning Brewery Garage Project,
and he's with me now, Joss.

Speaker 2 (00:55):
Good evening, Good evening.

Speaker 1 (00:59):
First of all, can gratulations you're holding up one percent
of the economy.

Speaker 2 (01:04):
Thanks. I don't know if we can take full responsibilities
before that, but it is great to see you know
that brewing is making such a positive impact across New
Zealand and throughout the economy.

Speaker 1 (01:15):
Is it quite labor intensive?

Speaker 2 (01:19):
You know, with the smaller independent breweries, they are very
very labor intensive, so you typically see high levels of
employment in those breweries. And then as the breweries get larger,
it becomes more automated and you start to see fewer
employees per per sort of hector letter per liter produced.
But you know, there are very large brewing companies in

(01:41):
the country and they do employee significant in other people
as well.

Speaker 1 (01:44):
Where do you set garage project in terms of small big.

Speaker 2 (01:50):
We are one of the larger independent breweries in the country,
so you know, we're now starting to go little toe
to toe with the bigger breweries, especially in certain areas
like non alcoholic beers. Our tiny non elk beer is
the number three non elk beer in the country, behind
Heineken and Perni, which is really exciting, really pleasing to see.

(02:13):
But in the scheme of things, we are tiny. You know,
we are really small compared to sort of the multinational
breweries still and that goes for craft generally across the board.

Speaker 1 (02:23):
How do they feel about you taking them on?

Speaker 2 (02:26):
I'm sure that I'm sure that we weren't there, But
you know, I think you know, it's when you start
to get into into that share of market, we start
to become meaningful that they're probably definitely sitting up and
paying notice. And that's what you're seeing with the consolidation
over the last several years of smaller breweries getting purchased

(02:48):
by the larger breweries.

Speaker 1 (02:49):
Are you understanding of the alcohol excise tax increases that
we've been seeing, I mean they how much? How much
of what we consume. You know, if we get a
dozen beer or whatever is excise is tax.

Speaker 2 (03:04):
It's a huge portion. So our single largest ingredient cost
each month is excise tax to the government. It's tax
on a per later basis. So you know, a three
percent beer versus a six percent beer is double the tax.
And when you start to look at say a five
percent beer in a keg, you're almost getting to half

(03:26):
the cost of that keg comprising of excise alcohol tax
and GST by the time it hits the publican or
the hospitality.

Speaker 1 (03:35):
Venue, which is very very significant. How does that compare
to overseas?

Speaker 2 (03:42):
I think the biggest difference we see overseas. I mean, firstly,
other countries do tax alcohol in different ways. In America,
it's taxed on the package, so a keg of beer
has a flat tax irrespective of the alcohol content. In
the UK we see a tax scaling depending on the
size of the brewery. So the government here recognizes that

(04:06):
smaller breweries should be taxed at lower levels than the large, multinational,
multi billion dollar breweries. In New Zealand we have a
flat per leader of alcohol tax irrespective of the size
of your brewery.

Speaker 1 (04:20):
I mean, obviously this is a cost that you would
want to do without. But alcohol does come with social harm.
We all know this because we've seen it happen on
Courtney Place or wherever. What are you Is this something
you want changed or are you just saying, look, this
is a reality of doing business in New Zealand.

Speaker 2 (04:38):
Now we're perfectly happy with having alcohol tax. We think
that's appropriate. I think what hasn't been supportive of the
industry in the last few years across both governments is
we've had excise Excite has been pegs to CPI, Inflation
has gone through the roof, and we're one of the

(04:59):
few countries in the world that carried on tax increasing
their excise tax peace to that inflation. So you know,
we've had almost twenty percent excise increase in the last
three years, so excise is now significantly out of step
of what it would be if we looked at sort
of a one and a half percent average increase, which
we had from about twenty sixteen to twenty twenty one.

(05:21):
You know, we're probably paying twenty thirty levels of tax
as a country, as a drinker, as a producer, and
I think the industry is probably just asking government to
hate rein it back to what it should be in
twenty twenty five. It's tax at twenty twenty five levels.

Speaker 1 (05:37):
Yeah. Interesting, Why do you guys always run out of
your low card beers? Do this a personal question?

Speaker 2 (05:44):
I think it's you know, they're doing a big shift
in the last few years and none olt beers and
low car beers. And you know that's I guess part
of a wider trend of everyone. We're a bit more
to think things that are a little bit more health
conscious and better for you.

Speaker 1 (05:59):
Are you scaling up? Is it quite hard to do
the low carb option? And are you trying a companies
like you're trying to scale up so that you can
do more?

Speaker 2 (06:08):
You know, I think it's it's easy to put out
a low car beer, it's exceptionally challenging to make one.
It tastes delicious, you know, to have a beer that
you know how good Shout is ninety nine point nine
percent car free, and then to actually have some flavor
and taste in aroma that took a long time to
get right.

Speaker 1 (06:30):
Well, you've certainly got it right. I just need more
of it. Thank you. Josh. Great to have you on
the show. Just ruffle with us. He's the co owner
of Garage Project, talking about some of the challenges for
them in New Zealand, but also I guess huge opportunity,
particularly you've got people like me consuming so much of it.
For more from Heather Duplessy Allen Drive, listen live to

(06:52):
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