High court upholds controversial drinks tax

5th August 2004, Comments 0 comments

5 August 2004, KARLSRUHE - Germany's high court Thursday upheld a controversial bottled-beverage tax aimed at curtailing consumption of flavoured alcoholic beverages by teenagers. The Federal Constitutional Court rejected an injunction sought by the alcoholic beverages industry to reverse the new tax. The tax, which effectively increases the retail price of flavoured alcoholic beverages by about EUR one per bottle, went into effect nationwide on Monday. The justices, in handing down their decision, said th

5 August 2004

KARLSRUHE - Germany's high court Thursday upheld a controversial bottled-beverage tax aimed at curtailing consumption of flavoured alcoholic beverages by teenagers.

The Federal Constitutional Court rejected an injunction sought by the alcoholic beverages industry to reverse the new tax.

The tax, which effectively increases the retail price of flavoured alcoholic beverages by about EUR one per bottle, went into effect nationwide on Monday.

The justices, in handing down their decision, said the industry had failed to establish a constitutional question.

Industry attorneys had alleged that the tax would cost the alcoholic beverages industry millions of dollars in lost revenues and consequently lead to layoffs at bottling plants.

The industry says spirits-based flavoured alcoholic beverages (FABs), dubbed "alcopops" in Germany, showed dynamic triple-digit growth in recent years. The boom has been attributable to their young and trendy image, flavour variety and the hugely successful introduction of two key international brands, Bacardi Rigo and Smirnoff Ice.

Product innovation has also benefited beer-based FABs that take the lion's share of FABs sales in Germany.

The younger image and sweeter taste of these drinks, especially beer and cola mixes, increasingly appeal to younger consumers, and the long-neck bottle allows for convenient consumption. This has been largely to the detriment of beer, although Germany remains a nation with one of the highest beer consumption rates in the world.

Alarmed by skyrocketing rates of alcoholic abuse among teens and young adults, Germany's centre-left coalition government enacted the alcopops tax law aimed at stemming consumption.

In response, the beverages industry has shifted its focus from spirits-based beverages to wine-based flavoured drinks which do not fall under the law's definition.

DPA

Subject: German news
 

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