The peak bodies representing spirits producers and liquor retailers in Australia have called for urgent action in the wake of “alarming evidence” of illicit alcohol being sold openly in licenced venues across Melbourne.

“The prevalence of contaminated spirits identified in published research is absolutely unacceptable in a country such as Australia, which has always had high standards for food and beverage products underpinned by a strong regulatory framework”, said Spirits & Cocktails Australia Executive Director Steven Fanner.

The researchers found spirits contaminated with substances indicating the products were not produced in compliance with the Food Standards Code. Of particular concern are findings of alcohol for sale containing levels of methanol well above allowable levels.

“This situation cannot be allowed to continue. We are calling on the Federal Government to urgently review the tax settings that are creating the incentives for illicit trade in alcohol. We have a narrow window of opportunity to correct the course in spirits before it follows the same path we have seen in tobacco, where the illicit market now dominates”, said Mr Fanner.

“Australia has the highest spirits tax in the world, outside of Scandinavia, and it will rise again in August to over $110 per litre of pure alcohol. The spirits industry has been voicing concerns Australia’s high excise rate, equating to more than $30 on a standard 700mL bottle of spirits is accelerating demand for cheaper, illicit products.

“Despite having some of the highest spirits taxes anywhere in the world, Australia is seeing more and more illicit alcohol being pushed into the industry at very low prices, undermining legitimate producers”, Mr Fanner said.

“Industry has consistently warned government that Australia’s spirits taxa on arrangements, combining high tax rates and loose controls, are now creating an environment that risks incentivising demand for illicit alcohol and opportunistic behaviour. We are calling for an urgent review to ensure our tax settings are not distorting the market and creating an environment for illegal activity.”

Retail Drinks CEO Michael Waters said illegal alcohol is no longer a niche compliance issue. It is a growing threat to consumers, legitimate retailers, government revenue, and public confidence in the alcohol supply chain, undermining legitimate producers and retailers.

“The legitimate industry will not stand for criminal or non-compliant operators who avoid excise, bypass regulatory obligations, and sell products at prices that should immediately raise suspicion,” said Mr Waters.

“Retail Drinks has long advocated for a reduction in government-imposed costs on liquor retailers, including lower taxes, fees, and charges. It’s particularly concerning how this is playing out in the spirits category as the high excise on spirits is contributing to the current spike in illegal activity.

“Retail Drinks has launched enhanced Product Ranging Guidelines as part of a broader Know Your Product campaign to educate and support liquor retailers in making responsible ranging decisions, reduce harm from excessive alcohol consumption, and identify, prevent and report illegal alcohol,” he said.

“The lesson from illicit tobacco is that once illegal markets become entrenched, they are much harder to unwind. We do not want illegal alcohol to go down the same path.”

Australian Distillers Association CEO Kylie Lethbridge said, “The spirits sector has grown into a significant contributor to the national economy, generating $15.5 billion in annual economic activity, supporting more than 100,000 jobs and attracting more than 630,000 tourism visits annually across regional Australia through manufacturing, agriculture, hospitality and tourism.”

“Any alcohol produced or sold outside Australia’s strict regulatory framework is deeply concerning and poses significant risks to consumer confidence, public safety and the legitimate businesses operating responsibly within the law,” she said.