Why beer in Australia could be about to get even MORE expensive

The Australian Taxation Office's attempt to define what exactly beer is could lead to consumers paying more for flavoured drinks including seltzer, ginger beer and even some lager - but craft brewers are fighting back.

How alcohol is defined makes a huge difference to the price, as excise duty on beer is far lower than for 'other excisable beverages', including spirits and pre-mixed drinks.

As things stand, the excise rate on beer varies between $2.22 and $36.98 per litre of alcohol, with other drinks taxed at between $58.48 and $66.67 per litre of alcohol.

But the ATO is looking at changing what beer is defined as, which would mean higher prices on some popular drinks if they were re-categorised as not being beer.

Alcoholic seltzers and drinks initially brewed as a beer but then altered - for instance, with fruit - would fall under 'other excisable beverages', according to the ruling.

A draft ATO ruling said that for a drink to be considered a beer, it had to meet a 'conventionally understood' definition of having a bitter taste and a mid-to-low-level alcohol content.

It also said its taste, smell and appearance come from its beer base through the fermentation of grains, most often barley.

But in a letter sent to the ATO, Independent Brewers Association chief executive Kylie Lethbridge said the move was 'insulting' to an industry that regularly develops new beer styles and flavours.

In the letter, which was reported by the Sydney Morning Herald , Ms Lethbridge said the change would mean 'on any given day, a tax officer would have the power to determine what product is beer – presumably absent any qualifications in brewing'.

She said a narrowed definition could also have unintended consequences for some of Australia's most popular lagers.

'Lagers are formulated with very low bitterness, very low flavour, and use production techniques to "strip them of their taste" ... to the point that they too could be understood to push the boundaries of what could conventionally be understood as beer.'

Speaking on Perth radio station 6PR on Monday, Ms Lethbridge said the ATO's planned changes could be 'The last nail in the coffin for our small independent craft brewers in Australia.

'We feel a bit like we're in the firing line, this will have a significant impact for a number of brewed products that are beer, even outside of seltzer,' she said.

'Aussies who want to go out, want to meet people ... want to go out to the local pub, have a couple of beers, it's just almost becoming unaffordable.

'Particularly when you've got the cost of living crisis overlaying that.'