The WA State Government temporary restrictions and our letters to the WA State Minister.

On Wednesday 25th March 2020, the WA State Government introduced temporary restrictions on alcohol sales. Today, Friday 27th March 2020, the WA State Government updated these restrictions. Sales are now back to normal, with the exception of WA customers. For all our customers in the rest of Australia and overseas; there are no restrictions. Unfortunately, with this update, we are still obliged to require all our WA customers to limit their orders to 9L (the equivalent of 12 standard bottles) per customer per week.

On March 25th, 2020 and March 27th, 2020 we sent the WA State Minister letters to voice our concerns about these decisions. You can find these letters below.

We acknowledge the huge support we got from all our members in regard to our first letter and thank everyone very much. We would be pleased to have our WA customers further support on this matter and if they would like to voice their personal concerns, here is how to contact the Minister: minister.papalia@dpc.wa.gov.au

We thank everybody for their overwhelming support over this ban.

 

March 27th 2020

Dear Minister Papalia,

Following my letter to you on Wednesday 25^th, I’d like to pass on my thanks to your and your colleagues for listening to our concerns and reviewing and updating the changes made to the Liquor Act 1988 with the Section 31, Notice Number 1.  However, with all due respect, Notice Number 2 has solved only a small part of the problem and left major issues still outstanding.

I acknowledge that Public Health and Policing are not my areas of expertise but as things currently stand, even with the changes announced today, I cannot see how the restrictions on takeaway liquor can have any impact on the problem of alcohol abuse.  Except in very small communities, which might have only one liquor license, the regulations cannot work because those who are determined to purchase excess alcohol need only go from one outlet to another, buying the mandated quantity each time.  In any larger community and especially Perth, people are able to shop at numerous locations, so opportunities for excess consumption remain exactly the same as before the changes came into effect.

Assuming the Government’s intention, for which it deserves credit, is to reduce alcohol-related harm and therefore keep hospital admissions associated with the same to a minimum, I am at a loss to see how either Notice Number 1 or Notice Number 2 contribute anything at all.  If I’m missing something here, I’m very happy to receive and consider any explanation to the contrary.

Yes, we are relieved and thankful for the changes introduced in Notice Number 2, allowing us to sell wine, without quantity restrictions, to licensed and unlicensed persons interstate, thereby restoring some of our lost revenues.  Sales to licensed customers in Western Australia are also now possible without restrictions, which solves the problem we had with supplying wine to our wholesale agent.  Also, the decision to grant occasional liquor licenses for 6 months to allow restaurants to sell wine with takeaway meals is also very welcome.

However, I’m completely perplexed by the decision under Notice Number 2 to limit sales to unlicensed individual customers in WA to one dozen (9 litres) per week.  This is lower than was previously available under Notice 1, of 3 bottles per customer per day which is 15.75 litres per customer per week.  Most frustratingly of all, interstate suppliers can continue to sell wine into Western Australia without limits.  I explained to you in my previous letter how our business, and many similar in the WA wine industry, is especially impacted by this.  A significant number of our customers buy more than 12 bottles at time of release with the intention of consuming over many years.  Yes, we can work around the 9 litres per person per week rule but it adds significant costs and time to dealing with these people.

So, the question remains, why is the WA Government continuing to significantly disadvantage local companies?

Minister, I am concerned you will look at this and wonder if my complaint is justified.  After all, part of the damage has been corrected by today’s changes in Notice Number 2.  I don’t wish to appear ungrateful but if there is no gain for the community, why should the WA economy experience any losses at all?  My view is it should not.

I reiterate I agree with, and support, the Government in its desire to ensure the safety of all Western Australians.  These are challenging times but unfortunately the Law of Unintended Consequences is playing havoc.  In anticipating a problem with alcohol abuse, the State has introduced regulation so ill-considered it can do nothing to prevent it.  To then add insult to injury, we now have range of new difficulties besetting the Wine and Retail industries for absolutely no gain.  Frankly, this shows the Government in a very bad light but this need not be so.

Despite you having already given this matter serious consideration, I ask these restrictions be reviewed again, at your earliest convenience, because there are positive outcomes to be had for us all.  If the Wine Industry and Retail Liquor Trade are freed from the unnecessary and disadvantageous limit of 9 litres of wine per person per week, the State’s economy will surely benefit, leaving the Government with at least two fewer sectors to worry about.  If there are WA customers buying more online than the regulations currently allow, why not let local businesses make those sales and keep the funds here in our State?  We can continue to trade as well as the current circumstances allow, keeping the local wheels of commerce turning and employing as many staff as possible.

Yours faithfully,
Keith Mugford

 

March 25th 2020

Dear Minister,

By way of introduction, my wife, Clare, and I are the owners of Moss Wood vineyard and winery, located at Wilyabrup.

As the Minister responsible for Liquor Licensing, we wish to make clear to you, in the strongest possible terms, today’s decision to restrict takeaway liquor sales under Liquor Control (Section31) Notice 2020 is a mistake and a serious threat to our business.

Expressing a personal opinion about this as a matter of public health, I respect the Government’s desire to protect the hospital system and the community in general, by reducing the possible harm caused by excess alcohol consumption.  However, the only conclusion I can draw is this measure is very unlikely to achieve the required outcome.  As the restrictions currently stand, they cannot prevent people from buying more than the mandated quantity of alcohol because they can simply visit more than one store.  The further complication is these extra human interactions provide more opportunities for the transmission of COVID-19. 

Separate from the health issue but just as serious, is the Government’s failure to explicitly exclude online sales and sales to wholesalers, from these restrictions.

Firstly, WA consumers can continue to purchase wine online, in any quantity they wish, from interstate suppliers, so Western Australian wine producers are put at an immediate and significant disadvantage.  Minister, this is, without doubt, the issue that really irks me, that the Western Australian Government, in this most difficult of times, has failed to support local producers.

Secondly, in a  business like ours with a focus on high quality, high value, low volume production, all our wines are purchased with the intention of ageing them in the cellar and then consuming them over as many as 20 years, or more.   The typical purchase is therefore greater than 3 bottles and usually 6 to 12  bottles or higher, if we’re lucky and they really like the wine and have the wherewithal to pay.  As a further complication, in response to the COVID-19 outbreak and depressed consumer sentiment, we are offering wines with free shipping.  If sales in the Direct channel are restricted to 3 bottles per person, the freight charge will increase to the point where our margins will be badly eroded.

The impact of this change has been immediate.  Today, since the introduction of the restrictions, we have had to turn down sales of our newest release, totalling 56 bottles, with a value $6468!  For a small operation like ours this is heartbreaking and potentially ruinous if things don’t change.  I hope it makes crystal clear how badly this decision affects us.

I mentioned above this difficult time and must emphasis at the moment, direct sales to customers, not just in WA but all around Australia, are literally providing us with a lifeline.  We have wholesale agents representing us in each state but their businesses have been turned on their heads by the shut down in the on-premise sector, which typically provides at least 50% of their revenues.  Yes, that’s correct.  At least 50% of income gone almost overnight.  While the wholesale market is in turmoil, up until today we have been able to keep cash coming in by selling on line and it is absolutely crucial for us that this channel be immediately and explicitly exempted from the restrictions.

My final point on the loss of the Direct sales is the cost of the changes we have had to make to our website.  We find it remarkable that we have spent a large part of today day in discussion with our web consultants and will now have to pay for the best part of a day’s worth of the very valuable hours charged by them, to change our purchase page to sell less wine!  I trust you understand just what a bitter pill that is to swallow.

Thirdly, on the subject of wholesalers, our sales to our WA agent are always larger than 3 bottles.  It would be prohibitive, impractical and pointless to send wine from Wilyabrup to their warehouse in such small quantities.  It is essential that these sales also be explicitly exempted from the restrictions.  It may be the Government did not intend for wholesale sales to be restricted under the new regulations.  Regardless, until this is made clear, we have to assume otherwise in order to trade within the requirements of our license.

While acknowledging the COVID-19 emergency is a huge public health challenge for the WA Government, I hope it is clear that unless changed, these restrictions will cause a major, negative disruption to our cashflow and put the viability of our business at serious risk.  We ask the State Government to completely repeal the new restrictions, as speedily as possible.  Failing that, we ask that wine sold in the direct channel, by mail or online and also wine sold to wholesale agents, be made explicitly exempt.

Frankly, Minister, the immediate future is difficult enough for us without adding this ill-considered decision to the list of problems.  I respect completely the Government’s commitment the community’s safe but I believe that a review and adjustment of these new restrictions, showing as it would a sensible commitment to the WA wine and retail industries, would very much enhance the Government’s standing.

Yours faithfully,
Keith Mugford