NATIONAL
LIQUOR NEWS – January 2006
Bright outlook for 2006 by Gordon Broderick
It only seems like yesterday since I wrote about DSICA’s outlook for 2005. Back then I noted that a certain horse had just won the Melbourne Cup for the second time. I also predicted that 2005 might be a year in which governments introduced a range of policies that would further bind the liquor industry in red tape. I can safely predict that Makybe Diva won’t make it a double hat-trick but I still think that in the year ahead the liquor industry faces challenges with respect to government regulation.
Governments did not introduce new regulations to the extent that I thought it might in 2005. However, this can simply be attributed to the speed at which the wheels of government having been turning. In 2004 a plethora of government inquiries into our industry were announced and it was expected that these would be finalised in 2005. However, a number a key inquiries have yet to delivery their findings to government.
For example, the Ministerial Council on Drug Strategies (MCDS) – a joint State and Commonwealth Government council of health and police Ministers – was due to release its 4 year alcohol strategy in 2005. It now looks like this strategy will be released in the first half of 2006. Similarly, a Victorian Parliamentary Inquiry into Strategies to Reduce Harmful Alcohol Consumption will now be reporting in 2006. In Queensland, Premier Beattie’s 17-point Brisbane City Safety Action Plan has resulted in some measures being introduced but the most significant proposals, including a review of the Liquor Act will not occur until 2006.
DSICA’s overall observation from last year – that our industry is under the government microscope – has not changed and will continue into the year ahead. Therefore, don’t be too surprised if some unpalatable and onerous regulations are imposed upon the industry this year.
Another interesting observation DSICA wishes to record is that over the previous 12 months non-government organisations (NGOs) and to a lesser extent some governments have appeared to change their focus from illicit drugs to alcohol. I expect that this focus will become more pronounced over the coming year.
Another trend to watch out for is increased bureaucratic activism. In May 2005 the World Health Organisation (WHO) adopted a resolution which could have serious implications for the liquor industry. It can be expected that the WHO will develop a range of highly restrictive and interventionist policies for alcohol. These policies have the potential to filter down to the domestic level.
2005 was an exciting year for the liquor industry in general and for the spirits and liqueur industry in particular.
Early in 2005 DSICA announced that its members would be introducing a standard drinks symbol on alcohol beverages to provide consumers with clearer and more prominent information on standard drinks. DSICA members were commended for this initiative by governments who subsequently asked the beer and wine industries to adopt similar symbols.
Last year also saw the introduction of DrinkWise Australia. This was the culmination of 18 months work from leaders of the beer, wine, spirits industries, and hotels and liquor stores. DrinkWise is an independent organisation focused on promoting a cultural change to develop a more responsible Australian drinking culture. DrinkWise opposes the misuse and abuse of alcohol but encourages its moderate use, so that most people can enjoy alcohol as part of a healthy, balanced lifestyle.
I mentioned earlier that 2006 will throw up some challenges with respect to government regulation, however, I am confident that the year ahead will be very promising for the spirits and RTD markets.
RTDs now make up around 10% of the total alcohol market, and DSICA estimates that RTDs sales in 2005-06 will be around $2.2 billion. DSICA also estimates that growth in the RTD category will be 5.2% over 2005 06. This growth is impressive given that other beverage categories have been in decline for a number of years. There has also been a rise in the popularity of cocktails and mixed drinks at licensed premises, particularly in inner-city venues. This trend will continue to buttress the full strength bottled spirits market.
Wider factors should also ensure that 2006 will be a good year for our industry. The economy continues to perform solidly, interest rates are in check, and consumer sentiment should be buoyed with the ‘feel good’ atmosphere associated with the Commonwealth Games. All in all, DSICA considers that 2006 has a bright outlook.
