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Winemakers are set to enjoy the benefits of cheaper oak barrels under the Australian Government’s Tradex duty concession scheme, administered by AusIndustry, which removes duty from certain imported goods intended for export.
AusIndustry has been working closely with wine barrel importer, Vinum Australia, who initiated the pilot program to extend these duty exemptions to the wine industry.
For Tradex purposes AusIndustry has agreed that oak barrels are incorporated into wine when it is exported, making it eligible to be exempt from duty.
Industry statistics indicate that more than 60 per cent of wine produced in Australia is currently exported, much of it oaked wine, which means 60 per cent of imported barrels can be imported duty free under Tradex.
Removal of import duty delivers savings that can be passed through the entire supply chain, eventually to the overseas consumer, making Australia’s wine industry more competitive on the international market.
Director of barrel importer Vinum Australia, Anthony Radford, says the benefits of stripping the duty for Australian wineries is obvious.
“The current duty is five per cent, which works out to approximately $60 per barrel. It’s a cost that is imposed on the winery and one they ultimately have to include in their costs and pass on to the consumer,” Radford said.
“It doesn’t sound like much but when you consider that 60 barrels out of an order of 100 are eligible to be duty free, you are talking about a saving of $3600, which is sure to bring a smile to the accountant’s face.”
AusIndustry and Vinum Australia will be working closely with small, medium and large wineries to monitor the use of barrels and whether the resultant wine is consumed domestically or overseas.
“We’re tracking the use of barrels with particular parcels of wine to get an accurate percentage figure of how much oaked wine is actually exported,” Radford said.
Radford is currently working with Barossa wineries Grant Burge, Yalumba and Turkey Flat to monitor their barrels and how the duty affects exports.
Turkey Flat general manager Jaysen Collins says that with such a competitive international market, any cost advantage for Australian wineries is a bonus.
“It’s a saving that all Australian wineries who export can access, so, as a nation it makes us more competitive against overseas competitors such as France or South Africa, who don’t have to pay duty on barrels,” Collins said.
“From a winery point of view paying less duty frees up cash flow and gives us the flexibility to buy more barrels or other winery equipment as we need to.
“It’s a bad marketing cliché but it’s a win-win situation for everyone – the barrel importer, the winery and the consumer,” Collins said.
AusIndustry is the Australian Government’s business program delivery division in the Department of Industry, Tourism and Resources and it provides a range of incentives to support business innovation.
AusIndustry delivers a product range of 27 innovation grants, tax and duty concessions, industry support, small business skills services, and venture capital programs to more than 10,000 small and large businesses every year.