Bavaria presses Berlin to shield small distilleries from a doubling of alcohol taxes

Bavaria’s economy minister, Hubert Aiwanger, has urged Germany’s federal government to preserve tax relief for small distilleries if it moves ahead with a planned increase in alcohol taxes, arguing that craft producers would be hit hardest by the measure.

In a statement issued in Munich on Wednesday, Aiwanger said small distilleries should keep the current graduated system and reduced volume-based tax rates even if Berlin raises the duty on spirits. He said European Union rules explicitly allow such relief and warned against removing protections for small producers while increasing the standard rate.

The debate follows a proposal made in late April by the federal government’s health commission, which called for a doubling of the alcohol tax on spirits and other alcoholic drinks. Under that proposal, the standard rate would rise in stages by 2029 from €13.03 per liter of pure alcohol to €26.03.

Aiwanger said such an increase could leave small distilleries as the main losers of broader tax policy. He described those businesses as rooted in regional identity and local economies, and said many lack room to absorb another blow to their competitiveness.

He also tied the issue to agriculture and landscape management in Bavaria. According to Aiwanger, fruit from ecologically valuable traditional meadow orchards is often processed by distilleries, helping support the upkeep and preservation of those trees. If small distilleries lose income or shut down under higher tax pressure, that revenue stream could weaken.

The minister extended the same argument to brewing, saying medium-sized breweries should also continue to benefit from the existing graduated beer tax structure. He criticized what he called steering taxes, saying they rarely succeed, and argued that public education on responsible drinking would be more effective than higher levies.

He also said the federal government should focus instead on reducing bureaucracy and lowering energy costs, which he said would provide more meaningful help to small distilleries than new taxes.

The current reduced rates for certain small distilling operations stand at about €10 and €7 per liter of pure alcohol, compared with the standard spirits tax rate of €13.03, according to the Bavarian Economy Ministry.

For the drinks sector, the dispute matters beyond Bavaria’s local politics. A sharp rise in spirits duties could eventually feed into higher shelf prices and tighter margins for smaller producers that have less scale than large beverage groups. If relief for small distilleries is maintained, it could soften some of that pressure and help preserve jobs and competitiveness in regional spirits production.