By HELEN TUNNAH, deputy political editor
Young people have been pushed on to hard liquor and sales of sherries and light spirits have collapsed, say opponents of the Government's "sherry tax".
Some in the liquor industry say the Jim Anderton-backed tax has failed in its prime aim, which was to curb teenage binge drinking.
Data from the liquor industry and Statistics New Zealand, and anecdotal evidence from retailers, indicate that instead the young people who drank light-alcohol products have switched to stronger, full-strength, spirits.
That is hotly disputed by Mr Anderton, the associate Minister of Health, and the Distilled Spirits Association, which sells most full-strength alcohol in New Zealand.
Mr Anderton, the leader of the Progressive Coalition, said that if the light-spirit market had crashed he was glad the tax had been effective. He said young people did not drink spirits such as vodka or bourbon.
"That's not going to young kids. The evidence is we've been successful."
He said there had been no discernible increase in full-spirit consumption since the tax was imposed from June.
Mr Anderton, who is also the Minister for Economic Development, was unrepentant about the crash of the fortified-wine industry.
"It's been a declining market for a very, very long time."
National MP Judith Collins has urged Mr Anderton to acknowledge that the tax had failed, and to wipe it in this year's Budget.
She is drafting a private member's bill aimed at scrapping the tax.
"I think the tax should just be done away with. Binge drinking has always been a problem, it will always be there. The best way to deal with it is education."
She also supports raising the legal drinking age back to 20 years, from 18.
The tax was rushed into law last May and targeted light spirits between 14 and 23 per cent alcohol.
It did not apply to the already heavily taxed full-strength spirits, or ready-to-drink products, which have a low alcohol content but are popular with young people.
Controversially, the tax did catch fortified wines, such as sherry and port. Prices jumped up to 50 per cent.
Figures the Herald obtained show that in the first few months of the tax, the light-spirit market fell by about two-thirds. Fortified-wine sales plummeted 45 per cent between June and October.
Although Mr Anderton and the Distilled Spirits Association accept that those markets have fallen, they dispute claims of a 37 per cent increase in the number of young people drinking full-strength spirits.
But young people have switched, says Independent Liquor magnate Michael Erceg, the main supplier of light spirits and a vocal opponent of the tax, and the Hospitality Association.
The association and the Wine Institute also say older people have quit buying sherry or port, blaming the increased cost.
Hospitality Association chief executive Bruce Robertson told the Herald that the light-spirit market had been "gutted".
"Anecdotally, our members would indicate a shift from people buying light spirits to full-strength spirits."
Institute chief executive Philip Gregan said fortified-wine producers were struggling.
"The purpose of the tax was to address issues of youth drinking.
"Young people aren't drinking ports and sherries, and we don't believe they ever will do. The brand image isn't right."
Their view appears to be backed up by the Beer, Wine and Spirits Council, which gets its figures from Statistics New Zealand.
They show full-strength spirit sales rose by 5.7 per cent in the year to the end of September. For the same period a year earlier, full-strength spirit sales actually fell by 5.9 per cent.
There was a 0.9 per cent increase in beer sales, and a 2.5 per cent rise in wine consumption.
While the light spirit market collapsed, sales of ready-to-drink products continued to increase.
Mr Erceg's calculations indicate significant increases in consumption of vodka, bourbon and rum, and a 7 per cent overall increase in full-spirit sales.
"A large amount of light-spirit drinkers are simply buying the full-strength version, if not in the same quantity, then in a fairly significant quantity."
His rivals at the Distilled Spirits Association say that is not true, and there has been no increase.
Chief executive Thomas Chin, who agrees the light-spirit market has collapsed, told the Herald that his information showed there had been virtually no change in consumption of stronger spirits.
He said claims that there had been a move from light to full-strength spirits were "dubious".
Asked what he thought people were drinking instead of light spirits, he suggested beer or wine.
Mr Erceg said he would not be asking Mr Anderton to review the effectiveness of the tax.
"It's like holding up a newspaper in front of a blind man, so why bother."
Liquor figures
Rivals in the liquor industry produced dramatically different figures for alcohol trends following the tax's introduction in June.
WHAT THEY SAY
Michael Erceg, major producer of light spirits and ready-to-drink alcohol products:
* Jun-Dec 2003: light spirit sales dropped 56 per cent.
* Full strength spirit sales increased 7 per cent.
* Vodka consumption up 15 per cent, bourbon up 17 per cent, dark rum up 14 per cent.
* Low alcohol, ready-to-drink products up 4 per cent, June to November.
Distilled Spirits Association, whose members dominate the full strength liquor market:
* Jun-Nov 2003: light spirit sales fell 68 per cent.
* Almost no increase in full-strength spirit sales.
* No overall increase in gin, whisky, rum, vodka, brandy.
Associate Health Minister Jim Anderton:
* Customs Service says light spirit sales have fallen 83 per cent.
* No increase in full-strength sales.
Wine Institute:
* Fortified wine sales fell 45 per cent.
* Jun-Oct 2002: 555,000 litres.
* Jun-Oct 2003: 302,000 litres.
Beer Wine and Spirits Council:
* Full-strength spirit sales up 5.7 per cent for year to September 2003 (5.9 per cent drop in previous year).
* Wine sales increased 2.5 per cent in the year ended September.
* Beer sales increased 0.9 per cent for the same period.
Light spirit sales are not separated from ready-to-drink products.
AdvertisementAdvertise with NZME.
Latest from New Zealand
Earthquake-prone buildings a continuing issue for councils
Changes to remediation deadlines will not solve issues for all councils.