Opportunistic alcohol manufacturers are free to sell alcopops made from malt or low-grade wine as cheaper alternatives to ready-to-drink spirits because of a loophole in the law.
While the drinks are not yet available in Australia, some alcohol retailers and manufacturers expect that cheap drinks made using alcohol derived from beer and wine - which are less heavily taxed than spirits - will be sold in bars and bottle shops.
Sales of alcopops and other premixed spirits drinks are predicted to fall by 7 to 10 per cent after the Federal Government's surprise decision three weeks ago to increase taxes on them by 70 per cent.
According to industry sources, the possibility of a ban on drinks containing stimulants such as guarana, caffeine and taurine - which heighten drinkers' energy levels - has galvanised some manufacturers to explore the malt- and wine-based alternatives, dubbed "malternatives" by the industry.
The Distilled Spirits Industry Council of Australia, whose members produce most premixed alcoholic drinks, is not aware of any changes to laws to close the loophole. A spokesman for the Minister for Health, Nicola Roxon, confirmed the existence of the loophole, saying "these products would not be covered by these measures", referring to the recent tax change.
He could not say whether the loophole would be closed.
"We'd hope that the industry takes on some of the responsibility of tackling binge drinking," the spokesman said.
Some companies already sell malt-based alcoholic drinks in the US, where heavy taxes have been imposed alcopops.
As long as alcohol from another source is not added to the base alcohol, the makers are free to add colour and flavour and use names such as Sultry Strawberry, Brutal Fruit and Country Cocktails.
Cheap wine provides another opportunity. Because wine is taxed on the wholesale price rather than its alcoholic content, it is expected to be used as a base for cooler-style drinks that would cost a third of the price of spirit-based drinks.
The makers of two popular drinks, Jim Beam and Bacardi, have said they have no plans to bring such products to Australia.
The world's largest alcoholic beverage company, Diageo, could not import its Smirnoff Raw Tea because it has a dash of spirits added to it, pushing it into the alcopops tax bracket.
Diageo did not rule out selling such drinks in the future.
Its marketing director, John Green, said the recent tax change created even "more inconsistency". "This certainly presents opportunities for alternative types of RTD formats, some of them at a higher ABV [alcohol by volume], however, Diageo is committed to responsible innovation," he said.
Diageo has limited its products to two standard drinks per serve but it will not follow Foster's and Lion Nathan in withdrawing alcoholic drinks that contain stimulants.
Julian Lee Marketing Reporter, SMHPhotographer: Justin McManus