Policy & Issues

TAXATION

All alcoholic beverages over 1.15% alcohol by volume that will be consumed in Australia are subject to either excise duty or Wine Equalisation Tax (WET). Alcohol is subject to excise duty if it does not fall under the WET definition of ‘wine’ which is set out in the WET legislation.

In addition to grape wine and grape wine products, the WET definition of ‘wine’ includes fruit and vegetable wine, cider, perry, mead and sake. Cider (or perry) is defined as a beverage that:

is the product of the complete or partial fermentation of the juice or must of apples or pears
has no ethyl alcohol added from any other source, and
has no liquor or substance (other than water or the juice or must of apples or pears) added to give colour or flavour.

Fruit or vegetable wine is defined as a beverage that:

is the product of complete or partial fermentation of the juice or must of fruit or vegetables or product derived solely from fruit or vegetables,
has no ethyl alcohol added from any other source (except grape spirit or neutral spirit),
has no liquor or substance added to give colour or flavour (except grape spirit or neutral spirit), and
contains between 8% and 22% (inclusive) by volume of ethyl alcohol, or
if grape spirit or neutral spirit has been added, contains between 15% and 22% (inclusive) by volume of ethyl alcohol.

Cider or perry that is flavoured with other fruits or vegetables and that contains more than 8% alcohol by volume may be taxed under WET as long as it also meets all of the other requirements for a fruit or vegetable wine. Such products fall under the WET definition of ‘fruit or vegetable wine’ rather than cider.

Ciders that have had flavours added (such as lemon or blackcurrant) or contain anything that may add colour (such as caramel or cochineal) and are less than 8% alcohol by volume are not defined as cider or perry or fruit or vegetable wine, and are therefore subject to excise.

WET is based on the value of the wine and generally is a once only tax applying to the last wholesale sale. WET applies at 29% of the wholesale price (or notional wholesale price) before adding GST. A producer rebate scheme applies to all products subject to WET.

The Australian Taxation Office (ATO) administers alcohol taxes on behalf of the Federal Government and its website contains detailed information on alcohol taxes. For assistance, contact the ATO via the alcohol tax phone help-line on 1300 137 290 or by emailing wettechadvice@ato.gov.au.

STANDARDS

The Australia New Zealand Food Standards Code (the Code) sets out:

what may be added in the production of cider – permitted ingredients, additives and processing aids
how the product must be labelled – including when a product can be called cider, perry or fruit wine, and the information that must be included on product labels.

Can I call my product cider?

Cider (and perry) is a subset of ‘fruit wine and vegetable wine’ and under the Code:

must contain apple and/or pear juice (no less than 75:25 ratio of apple:pear juice for cider, and vice versa for perry)
may also contain other fruits, vegetables, sugars, honey, grains, spices and alcohol

Any beverage that meets this definition can be labelled as ‘cider’ or ‘perry’.

Interestingly, there are many products on the market that are labelled as cider because they fit within this broad definition of cider, but are not considered a cider for taxation purposes.

What standards apply to cider?

Chapter 1 of the Code contains many general standards that apply to all foods. Note that cider is exempt from the requirements in 1.2.4, 1.2.8 and 1.2.10 relating to ingredient and nutrition labelling.

Part 2.7 of the Code contains standards that apply specifically to alcoholic beverages:

Standard 2.7.1 – Labelling of alcoholic beverages and food containing alcohol: covers pregnancy warning labels, alcohol content (ABV) and standard drinks information
Standard 2.7.3 – Fruit wine and vegetable wine: sets out the definition of cider and perry including what ingredients may be added.

OUR AGENDA

Responsible drinking

Cider Australia Advocacy Paper – Responsible Alcohol Content of Flavoured Ciders (March 2024)

Cider is a fruit wine with many similarities to grape wine including its diversity in styles as well as its contribution to regional employment and economic activity. For this reason, cider is generally taxed under the same system as grape wine, the Wine Equalisation Tax (WET).

There is an anomaly in the WET rules that encourages the production of flavoured ciders with an undesirably high alcohol content. Specifically, where a cider is flavoured with fruits other than apple or pear, or any vegetables, spices or herbs, it is defined as a ‘fruit or vegetable wine’ and must contain a minimum alcohol content of 8% before WET applies. Flavoured ciders that contain less than 8% ABV are excisable and attract not only a higher rate of tax, but require the producer to navigate the complexities of a second tax regime. As a result, there are a large number of high alcohol flavoured ciders in the market.

Flavoured ciders are a significant and rapidly growing segment of the cider category in Australia, particularly amongst the younger demographic. Lowering the ABV threshold for WET-eligible flavoured ciders would allow producers to reduce the alcohol content of existing products with no impact on tax arrangements or tax revenue from those products. This is a simple yet effective way to improve responsible drinking outcomes.

Honesty in labelling

Cider, like grape wine, is made from fermented juice, in this case the juice of apples and pears. The origin of the juice in cider is an important consideration for many consumers, and Cider Australia believes that labels on cider should identify the country of origin of the juice.

The Federal Government introduced a new Country of Origin Labelling system in 2016. Cider, as an alcoholic beverage, is classed as a non-priority food under the new rules. Non-priority foods must include a country of origin claim on labels. As a ‘substantially transformed’ product, the country of origin statement for cider must relate to where the product was ‘made’ (fermented), rather than where the ingredients were ‘grown’. As a result, cider labels do not need to identify the origin of the juice.

For information on how to comply with the rules visit this website.

Product integrity

Did you know there is no minimum juice content in products labelled as cider in Australia? This is is a stark contrast to the situation in other key cider producing countries such as the UK – which has a 35% minimum juice requirement, and the United States – where cider must contain at least 50% juice.

Cider Australia advocates for reform of the definition of cider and perry in the Australia New Zealand Food Standards Code to ensure what is stated on the label aligns with consumer expectations, and the product composition requirements in comparable international markets such as the UK and United States.

Cider Australia believes that a product should not be labelled as cider or perry if it contains:

less than 50% by weight of apple and/or pear juice, and/or
alcohol specifically to increase ABV (to ensure RTD-style beverages are not called cider)