Excise

What could government do to make things easier for yourself or the next people that want to follow in your footsteps?

I think the biggest challenge for us and every other small distiller in the country is excise tax.

because I think a lot of people don't realise that, you know, every time when you buy a bottle of gin at the liquor store for, you know, a 700ml bottle, there's probably about well over $20 of that is going straight off in excise tax.

And that's before GST as well.

Now that certainly it has been passed on in the price of that bottle.

But as the producer, the manufacturer of the alcohol, we actually have to pay that tax before we even sell that bottle of gin.

So when it leaves, there's a designated area in our distillery called the customs controlled area.

And as soon as we remove our finished bottles from that area that is well audited by customs, we have to record that and it becomes liable for excise tax, which we have to pay.

A tax court decision from this September shows what it can cost.

A charity president ended up owing $1,327,500 in excise taxes over $590,000 he never gave back.

In California, law reaches that same transfer first and the other directors with it.

Start with California.

IF YOU DON'T KNOW, THAT IS THE FARM FUEL, THE SAME DIESEL THAT RUNS, COMBINES AND BACKHOES AND KEPT OFF PUBLIC ROADS BECAUSE IT DOESN'T CARRY THAT FEDERAL HIGHWAY TAX.

THE FEDERAL EXCISE TAX.

THE ORDER PUTS IT ON THE HIGHWAY AND DEFERS THE FEDERAL EXCISE TAX THROUGH DECEMBER 31ST.

NO INTEREST, NO PENALTIES.

THE FEDERAL TAX IS 24.4 CENTS A GALLON ON IT.

Taken together, improving demand in key markets, ongoing market share gains, and a steady pipeline of premium products give us confidence that whiskey can remain a major contributor to earnings growth over the coming years.

Now, one question investors often ask is how alcohol companies will be affected by future excise tax increases.

While tax hikes remain an industry-wide headwind, we believe EMI is relatively better positioned compared to some of its peers.

Here's why.

Excise taxes on spirits are partly based on alcohol content.

Generally speaking, higher alcohol products face a bigger tax burden.

EMI's newer growth products such as CLVB MP and Fundador Super Special have lower alcohol content versus some competing categories like gin and rum.