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Bacardi Lion Breezily Shrugs Off Alcopops Tax

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BACARDI MARTINI and Lion Nathan’s joint venture spirits business has extracted a 9 per cent sales increase from its suite of rum, gin, vodka and ready-to-drink mixes despite the Federal Government’s alcopops tax and the growing popularity of premium beer.

Bacardi Lion recorded sales of $63.07 million for the year to September 30, 2008, up from $57.87 million the previous year and $58.3 million in 2003-04.

The Australian beverage alliance, formed in 2003, sells such well-known brands as Bacardi Superior Rum, Bombay Sapphire Gin, Dewar’s Scotch, Grey Goose vodka, Grand Marnier and the popular premixed drinks Bacardi Breezer and Bacardi & Cola.

The joint venture’s slim bottom line – a profit of $1 million for 2007-08, against $667,000 in 2006-07 – is due in part to royalties that Bacardi Lion pays its shareholders.

Bacardi Martini charges the business a royalty for the use of its spirit brands in Australia, and the joint venture also pays a manufacturing fee to the Australasian brewer Lion Nathan for use of its production facilities.

The 2007-08 result included five months of the Federal Government’s tax on premixed drinks, an impost introduced in April last year that placed a 70 per cent tax rise on the ready-to-drink blends that are also known as alcopops.

It brought the tax on RTDs in line with the tax on full spirits and raised $424 million in Government revenue in its first 12 months.

Stephen Riden, manager of information and research for the Distilled Spirits Industry Council of Australia, said the industry noticed a 30 per cent fall in the sale of alcopops immediately after the tax was introduced.

”This was offset by a 16 per cent lift in the alcohol sold as spirits and a 5 per cent jump in sales for beer,” Mr Riden said. ”Since then beer sales have stayed at that higher level, RTD growth is now back into double digits and bottled spirit sales are declining.”

Mr Riden said consumers eventually switched back to RTDs, lured by the products’ convenience. A Citi analyst, Andy Bowley, said RTD volumes had returned to the double-digit growth trajectory they had before the tax hike.

”Beer doesn’t appear to be losing out, suggesting overall alcoholic beverage market growth.”

Changes in consumer tastes over the past 30 years can be seen in an increase in wine consumption at the expense of full-strength spirits. Flat sales of traditional beer have been eclipsed by the emergence of premium beer, with sales growing at close to 50 per cent.

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Thursday, August 17, 1:56 am

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