Are Suppliers of “Alcopop-Lookalike” Ciders Abusing a Tax Loophole to Sell Cheap Drinks to Youths?

The “alcopop tax”

During 2008, in response to the rising popularity of binge-drinking culture amongst Australian youths, the Rudd government introduced a 70% tax increase on pre-mixed spirit-based alcoholic beverages. This “alcopop tax” was aimed at reducing alcohol-related harm amongst the youth by pushing up the price of ready-to-drink sugary alcoholic beverages.

The problem with alcopop products was that these sweet and exotically flavoured drinks were cheap, accessible and commonly had a much higher alcohol content than similar cider and wine-based products. Furthermore, suppliers of alcopop beverages were criticised for using bright colours and pretty designs to attract young buyers.

Since the introduction of the alcopop tax, consumption of pre-mixed spirit-based beverages dropped by more than 30%. However, introduction of the tax may have opened up a tax loophole for “alcopop-lookalike” cider-based drinks to offer sweet, high-alcohol content beverages to young Australian’s at a seductively low price.

The stats seem to indicate that sweet, cider-based products are on the rise in popularity, particularly amongst teenage girls. The 2014 Australian Secondary School Alcohol and Drug Survey found that 9% of teen girls aged 12 to 17 said they most commonly drank cider. This was up from 1% in 2008.

Little Fat Lamb

One particular cider-based product which has come under fire is “Little Fat Lamb”. This drink comes in a 1.25 litre bottle that packs more standard drinks than a bottle of wine. The product can be purchased in a range of flavours such as cola, tropical and berry. If that doesn’t seem attractive enough to young Australians, a bottle of Little Fat Lamb can be scored for as little as $4.00 a pop, meaning a handful of loose change is more than enough coin to get the average teen “absolutely smashed”.

The reason Little Fat lamb can be offered so cheaply is because cider falls under the “Wine Equalisation Tax”, which is calculated at 29% of the wholesale price. This has led to criticism that the Wine Equalisation Tax is being used to sell lookalike alcopop drinks at a dirt-cheap price without compromising on profits.

Not only has Little Fat Lamb been accused of skirting the alcopop tax, the brand has also been criticised for using online marketing tactics that are “so far outside the Alcohol Beverages Advertising Code Scheme”.

The brand’s Facebook page is littered with memes about the drink. The page encourages viewers to use hashtags such as “yeahthelamb”, piggybacking off the popularity of the “yeahtheboys” movement, which was heavily criticised for promoting misogyny and rape culture. One post on the brand’s Facebook page with over a thousand likes pictures a bottle of Little Fat Lamb next to a teen passed out on a bench with the caption “name a more iconic duo”.

It’s not the first time the distributor of the product, Drink Craft Pty Ltd, have been criticised for breaching the Advertising Code. In 2015, the brand came under fire for designing its packaging so as to be appealing to minors.

Where to from here?

In response to the growing popularity of cheap, cider-based, sugary drinks, there have been calls for cider to be taxed on volume and for a minimum price to be introduced on all alcohol. It will be interesting to see whether these measures will be implemented, and, if so, whether they will help to curb Australia’s teen drinking problem. The general trend so far seems to suggest that beverage companies will find a way to offer sweet, potent concoctions to the lucrative teen drinking market.

Want to know more about tax obligations? Looking for an experienced solicitor in Newcastle, Sydney or the Hunter to advise you on Tax Law and Disputes? Call us on (02) 4929 7002, email us or complete an enquiry form.

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