Wineries squeezed by tax rise

Wineries squeezed by tax rise

New Zealand Winegrowers has warned that the country's wineries will have to absorb the latest Government tax rise.

Tax rose by four cents per bottle on 1 July, but consumers are unlikely to notice any rise in prices, New Zealand Winegrowers said today (2 July).

More than 80% of wineries surveyed by the trade body said that they would be forced to absorb the tax increase, instead of passing the costs down the chain.

The tax rise comes as New Zealand's wine sector struggles to drain a supply glut that has threatened to cripple some producers.

"Many wineries are already suffering financially and this latest tax increase will make the times that much tougher for them," said New Zealand Winegrowers CEO Philip Gregan.

"The simple fact is the market will not accept price increases."

Of the 170 wineries surveyed by the trade body, almost half said they had not increased prices for at least the last five years, despite an 11.6% rise in tax since June 2006. A third of wineries said they had lowered prices.

For a just-drinks review of New Zealand's wine sector, click here.