Duty Free Alcohol Rip off

[amp-qld]

I've been aware for some time that Duty "Free" alcohol at Australian Airports has been a rip off but it seems that other places are joining the excess profit game. I recently checked the price of 1 litre of Kahlua at Abu Dhabi airport, Brisbane Airport and my local Dan Murphy's. The Duty Paid price at Dan Murphy's is $34.90 including Duty and GST. Deconstructing that price gives the following (within a few cents):

Actual cost (including profit): $17.18
Duty: $16.00
GST: $ 1.72
Total: $34.90

The "Duty Free" price should thus be $17.18 plus some extra profit for the cost of an airport location. At Brisbane, they charge $31.99 and in Abu Dhabi (which used to have good prices), it works out at about $30.20. I don't know what Dan Murphy's profit is but I reckon the airport profit margins are many times more. I don't think it's worth the hassle of buying ordinary duty free alcohol any more.

As a hypothetical example, if Dan Murphy's profit margin is 25%, then Brisbane's is 111%!

What do other frequent flyers think and is there anywhere left where duty free alcohol is a reasonable price?

 

[marki]

Reasonable price will be the best at Dan Murphy's or Costco on specials. You can't beat it compared to the expensive floor space at major airports.

 

[MEL_Traveller]

I've been aware for some time that Duty "Free" alcohol at Australian Airports has been a rip off but it seems that other places are joining the excess profit game. I recently checked the price of 1 litre of Kahlua at Abu Dhabi airport, Brisbane Airport and my local Dan Murphy's. The Duty Paid price at Dan Murphy's is $34.90 including Duty and GST. Deconstructing that price gives the following (within a few cents):

Actual cost (including profit): $17.18
Duty: $16.00
GST: $ 1.72
Total: $34.90

The "Duty Free" price should thus be $17.18 plus some extra profit for the cost of an airport location. At Brisbane, they charge $31.99 and in Abu Dhabi (which used to have good prices), it works out at about $30.20. I don't know what Dan Murphy's profit is but I reckon the airport profit margins are many times more. I don't think it's worth the hassle of buying ordinary duty free alcohol any more.

As a hypothetical example, if Dan Murphy's profit margin is 25%, then Brisbane's is 111%!

What do other frequent flyers think and is there anywhere left where duty free alcohol is a reasonable price?

First off 'duty free' dun = 'profit free' in Australia! They still make a hefty margin (suppose they gotta cover pretty high wages here + rent).

Secondly i think there are many cases where they will say it is 'tax free' rather than 'duty free'. So in your example, if you remove the GST component from the total $34 amount, you arrive at ~$31, which is around what they're asking.

There are some bargains to be had in Australia - premium top shelf items (like Grey Goose for example) will often be a lot cheaper than the stores. We seem to add a bit premium to some top shelf brands here which don't necessarily attract in other countries (Grey Goose is pretty cheap in the USA for example). I guess they try and keep it competitive.

 

[opusman]

Definitely not worth it for cheaper stuff.

For more expensive spirits you often get 1L for the same price as 700mL at Dan's.

E.g. FIRST at MEL, 1L Hendricks is $64.95, Dan's is 700mL for $69.95.

A few months ago I picked up a "duty-free only" 2.25L bottle of Hendricks at MEL for about $120 which seemed a pretty good deal. But you have to pay attention and have a feel for what things are worth.

 

[snabbu]

I generally find the 2 x 1.125ltr Jim Beam packs for NZD$59 (AUD$52ish) is great value as a single bottle retails for $49.00.

 

[Austman]

I generally find the 2 x 1.125ltr Jim Beam packs for NZD$59 (AUD$52ish) is great value as a single bottle retails for $49.00.

I think those are actually bottled in Australia (or NZ). Which probably helps reduce the cost too.

 

[Deleted member 29185]

This topic was covered just recently and I think the general consensus is that there are some really good buys and some really poor buys. Knowing the product you want is the secret.

 

[snabbu]

This topic was covered just recently and I think the general consensus is that there are some really good buys and some really poor buys. Knowing the product you want is the secret.

This is right on the money. As long as you know your products and have done some prior research you shouldn't get ripped off.

 

[kermatu]

This is right on the money. As long as you know your products and have done some prior research you shouldn't get ripped off.

Completely agree. I never impulse buy duty free - I always research the day before my flights at departure and arrival airports (and transit where applicable) work out what I want and then purchase. I have secured some very, very good deals this way.

I tend to buy blended or single malt whiskey. The cheaper / known brands are only worth purchasing if heavily discounted (1L J&B for $20 in Sydney the other day; Grants over-proof 1L for I think $27 converted). The rarer malts are usually good value year-round but even then it pays to look.

 

[kermatu]

Completely agree. I never impulse buy duty free - I always research the day before my flights at departure and arrival airports (and transit where applicable) work out what I want and then purchase. I have secured some very, very good deals this way.

I tend to buy blended or single malt whiskey. The cheaper / known brands are only worth purchasing if heavily discounted (1L J&B for $20 in Sydney the other day; Grants over-proof 1L for I think $27 converted). The rarer malts are usually good value year-round but even then it pays to look.

In Oz or NZ, by the way. The times I've looked in SIN, HKG, the Middle East, US, UK or elsewhere in Europe - duty free doesn't stack up against local prices, if you do your research.

 

[Cruiser Elite]

The times I've looked in SIN, HKG, the Middle East, US, UK or elsewhere in Europe - duty free doesn't stack up against local prices, if you do your research.

Spirits in SIN in general bargains compared to Oz retail - as you said - do your research!

Would you like me to check some whiskey prices in SIN for you kermatu?

 

[kermatu]

Spirits in SIN in general bargains compared to Oz retail - as you said - do your research!

Would you like me to check some whiskey prices in SIN for you kermatu?

Checked in February on transit through SIN and was better off purchasing in SYD for what I wanted.

 

[Renato1]

If one visits the parts of Italy that aren't tourist Meccas (e.g. Rome and Venice where they rip off tourists), then one can expect to pay 10 or 11 Euros for standard stuff like well known blended Scotch whisky and for bourbon, 12 Euros for stuff like Cointreu, and 16 Euros for Grand Marnier, and 30 to 40 Euros for most of the good quality Single Malt Scotches we pay $100 or more for (though I bought a bottle of 10 yo Talisker for 20 Euros when it was on sale).

And if one isn't fussy, one can go into a Lidl supermarket and spend 4 or 5 Euros on a bottle of Scotch or bourbon (though one bottle of bourbon I got there was rubbish, but one was quite good). Or 5 Euros for a bottle of Scotch cream, which I thought better than most Irish creams I've tried.

However, prices in the Rome and Venice airport duty free stores were a lot higher than in the typical Italian supermarkets.
Regards,
Renato

 

[kermatu]

If one visits the parts of Italy that aren't tourist Meccas (e.g. Rome and Venice where they rip off tourists), then one can expect to pay 10 or 11 Euros for standard stuff like well known blended Scotch whisky and for bourbon, 12 Euros for stuff like Cointreu, and 16 Euros for Grand Marnier, and 30 to 40 Euros for most of the good quality Single Malt Scotches we pay $100 or more for (though I bought a bottle of 10 yo Talisker for 20 Euros when it was on sale).

And if one isn't fussy, one can go into a Lidl supermarket and spend 4 or 5 Euros on a bottle of Scotch or bourbon (though one bottle of bourbon I got there was rubbish, but one was quite good). Or 5 Euros for a bottle of Scotch cream, which I thought better than most Irish creams I've tried.

However, prices in the Rome and Venice airport duty free stores were a lot higher than in the typical Italian supermarkets.
Regards,
Renato

Very similar experiences in Spain, UK and Germany in the last 18 months. Fortunately you can search so many sites online so it isn't that hard to work out what is a bargain and what isn't, based on where you may be travelling.

 

[Boca68]

I've been aware for some time that Duty "Free" alcohol at Australian Airports has been a rip off but it seems that other places are joining the excess profit game. I recently checked the price of 1 litre of Kahlua at Abu Dhabi airport, Brisbane Airport and my local Dan Murphy's. The Duty Paid price at Dan Murphy's is $34.90 including Duty and GST. Deconstructing that price gives the following (within a few cents):

Actual cost (including profit): $17.18
Duty: $16.00
GST: $ 1.72
Total: $34.90

The "Duty Free" price should thus be $17.18 plus some extra profit for the cost of an airport location. At Brisbane, they charge $31.99 and in Abu Dhabi (which used to have good prices), it works out at about $30.20. I don't know what Dan Murphy's profit is but I reckon the airport profit margins are many times more. I don't think it's worth the hassle of buying ordinary duty free alcohol any more.

As a hypothetical example, if Dan Murphy's profit margin is 25%, then Brisbane's is 111%!

What do other frequent flyers think and is there anywhere left where duty free alcohol is a reasonable price?

I hear where you are coming from, but there's a few problems in your quoted example. Firstly, Dan Murphys is a volume business. $34.90 for a 1lt Kahlua is an exceptional price. (Comparision Today. BWS $43.99, Liquorland $42.00) Profit margin is nowhere near 25%, try 5 to 10 %.

But the main problem, under Australian law, duty free alcohol does not remove liquor excise. It only removes the GST and in certain circumstances the WET excises. The laws were changed under the Howard Government (don't quote me, but circa 2003 or 2004. ) Its the same principle for cigarettes. The excises are not removed, only the GST. Which is why duty free alcohol in Australia is close to or often more than retail.


So, basically your calculation is incorrect. As for Abu Dhabi, I don't have an idea of thier excises or law. "Duty free" is a bit of a misnomer here in Australia. But, we are not alone in that respect. Many, if not most nations have adopted the same principles.

 

[Walter_Plinge]

In Oz or NZ, by the way. The times I've looked in SIN, HKG, the Middle East, US, UK or elsewhere in Europe - duty free doesn't stack up against local prices, if you do your research.

I haven't bought duty-free for years. Most recent trip to the UK Sainsburys was cheaper. For Taiwan, Carrefour was cheaper. I'm heading to Poland in a month and I bet Carrefour is cheaper there - provided I want to lug bottles around for two weeks.

 

[marki]

I haven't bought duty-free for years. Most recent trip to the UK Sainsburys was cheaper. For Taiwan, Carrefour was cheaper. I'm heading to Poland in a month and I bet Carrefour is cheaper there - provided I want to lug bottles around for two weeks.

I got a 750ml vodka for 20 AUD ( very good quality) in Cracow Poland. Class close to Belvedere Quality.

 

[Tortuga]

I got 1L of Bombay Sapphire at Melbourne airport for $38 AUD. Just checked on Dan Murphys and selling for $66 so I guess it all depends - do research before hand to know what is a good price.

 

[medhead]

But the main problem, under Australian law, duty free alcohol does not remove liquor excise. It only removes the GST and in certain circumstances the WET excises. The laws were changed under the Howard Government (don't quote me, but circa 2003 or 2004. ) Its the same principle for cigarettes. The excises are not removed, only the GST. Which is why duty free alcohol in Australia is close to or often more than retail.

That doesn't sound correct. Border force will charge duty on alcohol that is imported into Australia, even if it was purchased duty free here and then exported. If this claim is correct that would mean double charging of excise.

Section 4.3.1 of this guide specifically says that on airport duty free shops can seek good Duty and GST/WET free to travellers.

On-airport outwards duty free shops can sell goods duty and GST / WET free to relevanttravellers leaving Australia.

https://www.border.gov.au/Legacyrewritepages/Documents/duty-freeshopoperatorsguide2014-may14.pdf

 

[Deleted member 29185]

If this claim is correct that would mean double charging of excise.

I've always wondered how a GST can be levied on duty. That's also applying a tax on a tax, which I was under the impression is illegal in Australia.