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5/06/2015

Penfolds winemaker Peter Gago backs volumetric tax

Peter Gago, the winemaker of Australia’s most prestigious wine Penfold’s Grange, supports a volumetric tax on wine which would see the price of bulk and cheaper rise in contrast to a fall at the premium end of the market.

by Meredith Booth

At the launch of a $10 million redevelopment at Treasury Wine Estates’ ancestral home of Grange at Magill Estate today, Mr Gago said the future of the wine industry was at the premium end of the market.

Treasury Wine Estates has joined competitor Pernod Ricard, which owns Jacob’s Creek, to walk out of step with the industry by lobbying for a category-based volumetric tax and a removal of the wine equalisation tax rebate in submissions to a Federal Government tax white paper this week.

If government considered switching from a wine tax based on wholesale price to one based on its alcohol content, in line with spirits, beer and alcopops, bulk wine prices would rise while the cost of ultra-premium wines, like Grange, would fall slightly.

Estimates are each bottle of wine, whether it is cask wine or Grange, would be taxed at about $1.65 a litre.

Mr Gago said a volumetric tax was about reconfiguring the industry which needed to focus on the premium end of the market.

He countered claims made by inland wine grape producers and winemakers that a volumetric tax would devastate the industry by saying premium wines were sourced in all regions and there was an “insatiable” need for high quality grapes for premium wine in Australia.

“My view is the same as Treasury’s,’’ he said.

“I’d like to think there’s room for everyone its just a matter of range. The Riverland, for example, is a major source for our fortifieds. We’ve got premium in every area.’’

“We want more A1 Grange fruit and our Bin 707, we can’t make enough of. We have a growing need and we’ll pay what we have to pay because there’s an insatiable need for premium grapes and we have a global market,’’ he said.

A recent Winemakers Federation of Australia outlook report showing 84 per cent of Australia’s grape producers were unprofitable based on falling exports from a higher Australian dollar and a wine oversupply.

This story was originally published  in The Australian. 

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