Beer fans’ bitter blow
Wayward on brink as craft brewers warn of industry’s ‘perfect storm’
“Consumers are not supporting us to the extent that we need Peter Philip
Just days into 2024, Australian craft beer fans were given a reality check with news that a cult favourite – Wayward Brewing Co – had reached the brink of collapse.
Peter Philip, the founder of the Wayward brand based in Camperdown, in Sydney’s inner west, voluntarily put the popular business into administration on January 2, owing about $2m to trade creditors, statutory creditors and shareholders.
Mr Philip went out swinging, stating that conditions affecting smaller independent brewers were a “perfect storm” and that “consumers are not supporting us to the extent that we need”.
He said input costs had gone up 25-30 per cent in the past two years, with transport up 50 per cent and electricity up 70 per cent.
Several craft brewers fell into administration last year, and Mr Philip, a former chairman of the Independent Brewers Association, said Wayward “won’t be the last”.
Administrator Atle CroweMaxwell from DBA Reconstruction and Advisory added that the business was struggling under the weight of costof-living pressures and the high levels of government excise imposed on beer.
“This whole industry has just been smashed by excise,” he said of the government tax, which accounts for up to a third of the cost of beer.
Stef Constantoulas, cofounder of Sydney’s Philter Brewing, which pours across Australia, said the industry was stuck in a constant grind against myriad market forces.
“I don’t think there’s any lie that it’s a pretty tough trading environment for independent craft breweries at the moment,” Mr Constantoulas said.
“The number of friends of ours, unfortunately, hitting the administration button or losing their businesses is pretty shocking to see.
“We are in an industry where we are a premium on a premium.”
Two Japanese companies, Kirin (owner of Lion) and Asahi (owner of Carlton United Breweries) are actively acquiring independent breweries.
“We’re just not getting the support we need at a government level or as an overall industry to help us remain more competitive,” Mr Constantoulas said.
“Excise tax is the biggest gripe we have as an industry. We pay the same amount of excise that Lion or CUB do.”
Australia’s excise tax on alcohol is set to increase every six months, which will result in a continual rise in prices.
The tax has been widely criticised for contradicting the federal government’s $225m tax relief for small breweries and distillers as part of the 2021-22 federal budget.
“All these things just affect the price on the shelf, and then with things like excise going up six monthly, it’s very hard for us to hold price,” Mr Constantoulas said. “It’s also very hard for a consumer to understand why their beer is getting more expensive.
“You can’t begrudge the guys who sold – it’s almost like winning the lottery, in terms of the money that gets paid for these craft breweries.
“I think the shame for us as an industry as a whole is we lose very important players, because the ones getting bought are obviously quite large – we almost lose a big chunk of our voice when that happens.”
Craft beer makes up roughly 5 per cent of the beer market, according to Deloitte, yet it is estimated to generate more than 50 per cent of brewing jobs in Australia.
Independent brewers face an additional challenge in the form of “tap contracts”, whereby major companies acquire taps at pubs.
“I can’t afford $50,000 to take some taps,” Mr Constantoulas said. “It means there are hundreds of us independent craft breweries fighting for two taps on a 10-tap rack.”
Mr Constantoulas said that news of Wayward’s administration had shocked the industry.
“There’s something wrong with a system and how it’s run when good businesses like that, popular brands, are being forced to go under,” he said.