By ALEX MCKENZIE and SAM O’CONNELL
Popular cider Little Fat Lamb has come under fire for dodging a tax loophole, prompting concerns that it is contributing to binge drinking among young Australians.
Health experts have suggested the cheap cider should be taxed as an alcopop – a flavoured alcoholic beverage – because it resembles other pre-mixed drinks.
Dan Murphy’s employee Michael Paolino said Little Fat Lamb was popular among consumers aged between 18-25 because of its high alcohol concentration.
“Little Fat Lamb has a flavour similar to that of ciders in that they’re both sugary and have a berry flavour available,” he said.
“Its competitive advantage is that it’s got the easy-to-drink ability of ciders but the strength that ciders don’t have.”
According to a 2018 IBIS Worldreport, the popularity of ciders, marketed to a younger generation, has increased despite the overall reduction in alcohol consumption.
A 1.25 litre bottle of Little Fat Lamb contains 7.9 standard drinks and retails for $7.99, making it cheaper and stronger than most wines.
While all other alcoholic beverages are taxed by alcohol content, ciders fell under the Wine Equalisation Tax, which is calculated at 29 percent of its wholesale value.
Because the popular drink is marketed as a cider rather than a pre-mixed drink, Little Fat Lamb is able to be sold at a lower price.
VicHealth manager of alcohol Emma Saleeba said alcohol regulations needed to change in order to close the tax loophole that allowed the drink to be sold so cheaply.
“Different products are taxed in different ways and this is why you see issues like Little Fat Lamb happening,” Ms Saleeba said.
“They can exploit the incoherency in the alcohol tax system and classify themselves as a cider instead of a pre-mixed drink to get around particular tax requirements.”
Should Little Fat Lamb be subject to the alcopop tax?
In 2008, the alcopop tax was introduced in an attempt to curb binge drinking among Australia’s youth.
It involved a 70 per cent tax increase on pre-mixed drinks, but was reportedly ineffective.
Victorian Alcohol and Drug Association policy and media adviser Dave Taylor said the alcopop tax had resulted in a “consumption shift” to other alcoholic beverages.
“One of the risks with the alcopop tax is that it may well have reduced the consumption of alcopops, but probably brought about an increase in the purchase of straight spirits and soft drinks,” Mr Taylor said.
Minimum Floor Price
The Northern Territory government will become the first in Australia to implement a $1.30 floor price per standard drink for all alcoholic beverages.
Mr Taylor said a minimum floor price in Victoria would effectively reduce the consumption of high-concentrated alcohol in young people.
“You’ll find with a floor price people can still enjoy a drink, which is what people often want to do, but it makes it harder for purchase of huge amounts of alcohol and particularly reduces that for those risks towards really vulnerable cohorts,” he said.
VicHealth's Ms Saleeba said the community had previously responded well to floor prices.
“International evidence shows that people are price sensitive and that minimum pricing of standard drinks can prevent products like Little Fat Lamb flooding the market with cheap alcohol,” she said.
Increasing the price is just one approach to reducing binge-drinking
Ms Saleeba said other measures could be taken to reduce the high consumption of alcohol among young Australians.
“We can limit promotional advertising on our alcohol to a reasonable level, particularly to reduce exposure on young people and children,” she said
“It’s also important to maintain education, promoting low-risk drinking guidelines and supporting people in the community to either drink less or choose not to drink on certain occasions.”