Craft beer still tasty for giants

More takeovers on the cards

It’s been impossible to plan anything Peter Philip

THE thirsty giants of the Australian beer industry are expected to cast their eyes over more independent craft brewers as changing tastes continue to put fizz in the sector.

Multinationals Lion and Carlton United Breweries (CUB) have over the past few years picked up several leading craft brewers, adding a creative and diverse product range to their offering.

Last year Lion paid more than $500m for Australia’s largest independent craft brewer – the Byron Bay-based Fermentum, parent to Stone & Wood, Two Birds and Fixation.

Independent Brewers Association general manager Kylie Lethbridge said the transaction was “the big news of 2021”.

“It certainly put a ripple through the industry, but it’s very difficult to predict what will happen this year because we’re not privy to the strategies of the multinationals,” she said.

“But we do know that they’re going hell for leather to diversify and I don’t doubt that over time more independent craft breweries will be purchased.”

Over the past decade, independent craft breweries such as Little Creatures, Mountain Goat, Pirate Life and 4 Pines have been sold to the big two – Lion and CUB – and other large groups including soft drink manufacturers such as Coca-Cola Amatil.

With craft beer the flavour of the month, big-brand bottle shops – owned by Coles and Woolworths – are also creating their own craft-style beer to cater for growing demand.

Lion would not be drawn on whether it was seeking new acquisitions, but having recently acquired Fermentum it is unlikely it will seek a similar business in the near term.

However, Queensland University of Technology retail expert Gary Mortimer said craft beer was “going corporate” and he expected more independent brewers to be bought out by multinationals and larger companies.

“Mainstream beer consumption is falling and craft beer consumption is rising,” Professor Mortimer said.

“The whole mindset has changed. If we go back to the 70s it was all about XXXX and VB and volume consumption. There was a lot of heavy drinking. Now we’re preferring craft beers. Australian beer drinkers’ tastes have changed.”

Australia currently has about 625 independent craft breweries, ranging from the larger players such as Young Henrys and Gage Roads, to microbreweries.

According to a 2020 survey, independent brewers contribute almost $2bn annually to the national economy and directly employ about 7000 people, or about half the jobs in the sector.

Yet they only command about 8 per cent market share,

which the IBA is aiming to increase to 15 per cent in a decade.

Although beer consumption per capita has fallen 20 per cent in the past decade, the survey found independent craft beer sector market share is growing at a rate of 15-20 per cent a year.

However, Ms Lethbridge said many independent brewers had struggled through Covid-19, especially those

with a tap bar or restaurant.

On the brewing side, those that could diversify by increasing their online presence, and that were not reliant on keg pub sales but rather focused production on cans, were better equipped to withstand the pandemic.

“Any brewer that has hospitality as a part of their operation, which is quite a lot of our industry, is very challenged with staff being sick or

isolated, and then there are the supply chain issues and availability of materials,” Ms Lethbridge said.

Peter Philip, founder of Sydney-based Wayward Brewing Co, described the last two years as difficult. “It’s been impossible to plan anything,” he said. “As soon as it looks like we are coming out of it we get knocked around again. This latest surge has probably been the hardest.

“We’ve had staff come down with (Covid-19) and it’s affected production and logistics, and there is the fear we will have to shut down the entire production facility, but we have not had to do that yet. Our tap room is open but it’s pretty empty with this selfimposed lockdown.”

While off-licence trade has been fluctuating, Mr Philip said it was the brewer’s “saviour” with 75 per cent of its production going into cans and sold through bottle shops.

“Consumers are recognising that independent craft beer is good and they want to support local business rather than Japanese multinationals,” he said. “Recognition, locality and independence matters to consumers. We’re not as concerned about maximising profit and we’re more about maximising the flavour and the process.”