Alcohol excise duties have claimed another victim, with South Australia’s South Ave entering voluntary redundancy due to an ATO debt.

The company, which produces vodka RTDs and seltzers, recently celebrated its fifth birthday.

Co-founder Reno Marrasso told Adelaide Now that the company discovered it had $13 million excise debt after a voluntary audit last year.

“For a period with the ATO we kept being told we were in credit with excise, and we thought this doesn’t make sense, so we ended up choosing to do a voluntary audit,” he said.

The business entered a three-year repayment plan and had paid down part of the debt, but Marrasso said the ATO informed South Ave it was reducing the repayment period to 12 months.

“And for us, a 12-month time frame is never going to be feasible because it would just completely destroy the cash flow of the business,” he said.

Marrasso said the company had little other debt aside from outstanding ATO excise duties.

Producers across the drinks industry are increasingly closing their doors as rising costs take their toll. According to the Independent Brewers Association, 80 independent and small Australian craft breweries have entered voluntary administration or shut down since 2023.

Alcohol black market reaches grim milestone

While legitimate producers are struggling to survive, the ATO recently confirmed the country’s illicit alcohol market continues to grow.

The alcohol tax gap – which estimates how much excise and customs duty on alcohol is lost each year through things such as illegal production, unreported sales and non-compliance – has risen to $1.23 billion and now represents almost 14% of the market.

Spirits Council of Australia executive director Steven Fanner said that Australia’s growing illicit alcohol problem is being driven by record-high taxes, tax loopholes and inadequate regulation.

“Sadly, the fact that Australia now has a billion-dollar alcohol black market does not come as a surprise to anyone working in the industry, particularly legitimate producers whose products are being undercut by rivers of cheap, low-quality, tax-free alcohol,” Fanner said.

“Let’s be very clear, this hurts everyone – the government is losing more than $1 billion a year in revenue, responsible producers are struggling and consumers are being put at risk by products they can’t trust.”

Fanner urged the government to address Australia’s spirits tax, which is sitting at $110.15 per litre of alcohol, the highest in the world outside of Scandinavia.