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Wineries Respond to Alcohol Reform Bill Report

MEDIA RELEASE

FRIDAY 26 AUGUST 2011

WINERIES RESPOND TO ALCOHOL REFORM BILL REPORT

“A slap in the face for struggling wine businesses” is how New Zealand Winegrowers CEO Philip Gregan has described the Select Committee Report on the Alcohol Reform Bill released yesterday. The New Zealand wine sector is committed to moderate and responsible consumption of wine,” he said. New Zealand Winegrowers is supportive of policies and programmes that effectively address the harms associated with the misuse of alcoholic beverages, while also recognising that proper consumption of wine can promote health and social benefits.

New Zealand Winegrowers, in its submission to the Select Committee on the Alcohol Reform Bill, proposed a number of changes to limit compliance costs for small business while continuing to support steps to limit harmful consumption of alcoholic beverages.

“The Select Committee report failed to address the many compliance costs to small businesses, including those that had nothing to do with reducing harmful consumption of alcoholic beverages,” he said. “In addition the report does not do enough to recognise positive drinking behaviours and personal responsibility of consumers.”

New Zealand Winegrowers proposed the creation of a special class of off licence for winery cellar doors, in recognition of their low risk and special role in regional tourism. This proposal was designed to maintain regulatory oversight but relieve some of the cost burden on small wineries selling on average just one case of wine per day through the cellar door.

The Select Committee did not act upon this proposal. Very few of the other suggestions made by New Zealand Winegrowers to remove unnecessary compliance costs were taken up. Concerns voiced about the unintended consequences of measures to address irresponsible promotion also appear to have been ignored.

“Well-intended measures on advertising and promotion could well have negative effects” said Gregan. “There are already highly effective codes in place for advertising and promotion of alcoholic beverages. There is no evidence whatsoever that these are being flaunted by wine companies. A likely result of banning advertised discounts of 25% or more of the normal retail price will be increased pressure by large retailers on wineries to drop their retail prices, further crippling winery profitability.”

“Wine is important for New Zealand” said Gregan. “As well as being a major export earner, it is integral to our local hospitality and tourism industries. A vibrant and successful wine sector should not be incompatible with the goal of reducing harmful consumption of alcohol. Our country needs both good health and a strong economy.”

Examples of unnecessary compliance costs include:

• Auctioneers and homestays are granted exemptions from some of the more costly aspects of the licensing process, but not winery cellar doors which are widely acknowledged to be a very low risk environment. The cost of getting and renewing licences averages roughly $3 per case sold via the cellar door for small wineries.

• Many wineries will have to jump through extra hoops if they make more than 15% of their cellar-door income by selling corkscrews, olive oil and t-shirts. This adds up to more compliance for less wine sold.

• Some wineries can sell some of their wines on Easter Sunday, but not all wines and not all wineries. If a winemaker uses grapes that came from their vineyard down the road or they tried to manage their costs by having the wine made at their neighbour’s place, they miss out on one of the most important days of the year for wine tourism.

• A single operator winery cannot close their winery to go and pour samples at a local farmers’ market. Not only do they have to pay extra to get a special licence for the farmers’ market, but they have to pay someone to keep the cellar door open when they know all their customers will be at the farmers’ market anyway.

• Wineries will no longer be able to offer promotions along the lines of: “buy a bottle of Central Otago Pinot Noir and you will be eligible to enter the draw for a trip to Queenstown”. There is not a shred of evidence that such promotions contribute to harmful consumption of alcoholic beverages.

ENDS

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