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Fortified Wine Sales Fall 53% after Tax Increase

For immediate release
19 August 2003

Fortified Wine Sales Fall 53% after Tax Increase

Sales of fortified wines such as port and sherry fell sharply in June, and were 53% lower than June 2002 levels according to New Zealand Winegrowers. The reduction follows the 87% tax increase on fortified wines imposed by the government on May 6.

Citing data from the New Zealand Customs Service, Winegrowers said shipments of fortified wines from wineries were just 57,000 litres in June 2003, compared with 122,000 litres in June 2002.

Commenting on the sales slump, Philip Gregan New Zealand Winegrowers Chief Executive Officer said, “The May 6 excise increase nearly doubled the tax on fortified wines. There is no doubt that the June sales have been cut in half as a direct result of that excise increase.”

“There is also no doubt that the small number of wineries who produce and sell fortified wines are experiencing major difficulties as a result of the tax increase and the resulting sales slump. No business can cope with a 50% reduction in sales, particularly ones carrying high levels of stock as do fortified wine producers” said Mr Gregan.

New Zealand Winegrowers is calling on the government to revisit the excise issue. “We are certain the government did not intend to put the fortified wine producers out of business. However, the evidence that this may happen is building and it is up to the government to do something about it. We believe the government must act to ensure the tax is returned to previous levels and the businesses are saved” said Mr Gregan.

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