Who owns your beer?

How Lion, Foster’s, Coca-Cola, Woolworths and Coles are all muscling in on the craft beer business.
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01.Brewery beer battle


We're drinking less beer but we're getting better at it. Our demand for quality is higher than ever, with IBISWorld reporting a record 150 breweries now produce craft beer.

Home brewed

The definition of craft beer depends on who you ask. Chuck Hahn's Hahn Premium arguably began the current Australian craft beer boom in the late 1980s before he was bought out by Lion Nathan (now Lion). The Hahn brewery was then renamed the Malt Shovel Brewery which today produces Australia's biggest selling craft beer, James Squire.

Hahn is reported in The Australian as crediting the large brewers with nurturing the Australian craft beer industry, arguing craft beer has several definitions.

"Part of it is delivering on flavour that people expect and having the credibility of a brewmaster behind it who identifies with brands and controls all stages of the process," he told The Australian.

But the Australian Real Craft Brewers Association disagrees. For them, a craft beer must be independent, traditional, and 100% Australian owned with no ownership or control by a major brewer, such as Lion.

Are you drinking Aussie craft beer?

Australian Beers: Thomas Cooper's Selection (Coopers Beer); Mountain Goat Beer; Moo Brew; 4 Pines Brewing; Murray's craft brewing; Stone and Wood; Bridge Road Brewers

Last year's Australian brewer of the year Shawn Sherlock of Murray's Craft Brewing Co, also lists independence, as well as a smaller batch size, allowing more control of the brewing process, as key characteristics of a craft beer. But he contradicts Hahn reluctantly.

"Chuck has done so much for the industry, it's difficult to criticise him."

Sherlock is also quick to point out that American craft beers such as Sierra Nevada and Dog Tooth are now large breweries with a bigger market share in the US than Coopers have here, "but you can't not see these as craft beers".


Source: IBISWorld

Lion (formerly Lion Nathan) owned by Japanese brewer Kirin. Brewer of XXXX Tooheys and craft brands Little Creatures, James Squire, Kosciuszko Pale Ale, White Rabbit, New Norcia, Knappstein and MAD Brewers; Carlton and United Breweries (CUB, formerly Foster's Group) Brewer of Victoria Bitter, Carlton Draught, Pure Blonde and craft beers Bluetongue and Matilda Bay brewing company.

Sail and Anchor beer produced for Woolworths; Steamrail Ales produced for Coles; Arvo Lager and Alehouse Summer Gold produced for Coca-Cola Amatil

Brewery swill

Breweries swallow each other almost as often as we swallow a brew. An IBISWorld report says the Australian brewing industry is still one of the most profitable in the world, making it attractive to multinationals.

Japanese brewer Kirin acquired Lion in 2009 and the world’s second largest brewer SABMiller engulfed Foster's (now CUB) in 2011, leaving Coopers as the largest Australian brewer with a 3.5% market share according to IBISWorld. And Lion and CUB have been busy gulping craft breweries, most recently with Lion’s acquisition of Little World Beverages, brewers of Little Creatures.

In 2012 Coca-Cola Amatil sold its local alcohol arm to CUB and stayed out of the market until December 2013 as part of the deal. But it wasted no time in re-entering the market, securing rights to a range of international craft beers and forming the Australian Beer Company to produce locally brewed craft beers.

Even the supermarkets are in on the game, IBISWorld reports Woolworths owns a 25% stake in Gage Roads, which produce private label beer for Woolworths Liquor such as the craft-branded Sail & Anchor while Coles offers its own private label beer, Steamrail Ale.

Beer pong

Sherlock told CHOICE the better margins on tap beer can help grow a business and make it successful. Murray's pays Australian Bureau of Statistics: 96 litres of beer consumed in 1946; 192 litres consumed in 1974; 97 litres consumed in 2012$32 in excise tax per litre of pure alcohol on the keg compared to $45 for the bottle. Add to that the extra packaging costs and it's clear tap beer is where the war is won.

However the ACCC launched an investigation into the industry this year querying shady practices in the breweries contracts with pubs.

Most publicans have contracts with the major brewers which commonly offer kickbacks such as rebates or installation and maintenance of lines and taps by the brewery. So the battlefield shrinks to one or two leftover taps known as ‘floating taps’ which the pubs use for craft brews.

But the common experience is that a big brewer sales rep notices an independent craft beer on the floating taps and, several new umbrellas for the beer garden later, the independent’s beer has been bumped off the tap in favour of the big brewer’s craft beer line.

Smaller breweries can’t compete with these services. The best they can offer the publican is the beer at keg price but Sherlock says the beer is winning the war.

"It used to be that craft brewers could only hold a tap for one to two weeks but now we're able to access and hold the taps better than ever," he says,"As long as the public understands that some of the craft brands they are consuming are big brewery brands, that's all that matters. Let the beer stand up in the glass for itself."



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