Food

Crowding Out Craft: The Problem With Big Beer In Australia

Because life's too short for crap beer.

Beer is quintessentially, perhaps stereotypically, Australian. A scruffy larrikin tradie ducks down to his local pub, where a hard-earned thirst needs a big cold beer. A foamy schooner of lager passes over the bar for a couple of bucks and the charming Australian everyman shoots shit with his mates, sinking his favourite beer until he needs to be carried out in a wheelbarrow. That narrative is an old adage, a legacy of the 20th century that we still cherish like an old chew toy.

The truth is that the Australian market for beer has long been on a downward slide. People are no longer unashamedly loyal to Tooheys or Carlton. The typical modern snapshot of a round of drinks down at the pub is a mix of cider, G&Ts, and a couple of craft brews. In fact, craft beer is the only segment in the Australian beer market that is seeing growth, and in spite of shrinking gross sales, the Australian beer market remains one of the most profitable in the world.

Another unique feature of the Australian beer market is that it is almost exclusively controlled by foreign multinationals. The two biggest players, Kirin and SAB Miller, own the two big dogs in Australian beer, Foster’s Group (owners of Carlton United Breweries, CUB) and Lion, who together control about over 90% of the beer market. Not only do they own the classic Australian lagers VB, XXXX, Tooheys, Carlton Draught and Resch’s, they haven’t been sitting on their hands since the rise of craft brews.

If You Can’t Beat ‘Em, Buy ‘Em

The grandfather of craft brews is Coopers Brewery, which is still owned by the Cooper family in South Australia. The biggest and oldest underdog has a market share of about 3.5%of the beer market and is thus the largest all-Australian owned brewer. While it dodged a takeover attempt in 2005 by Lion, it is perhaps the exception to the rule. It is almost inevitable that smaller up-and-coming craft breweries are eventually guzzled down by the top dogs of Big Beer.

Matilda Bay Brewing Company flicked on its taps in 1989 and is considered Australia’s first true craft beer brewer. It was purchased by CUB a few years later. Around the same time a microbrewery by the name of Hahn was established and became successful in the premium beer market. It was subsequently purchased by Lion in 1993. A few years later, one of its breweries was renamed the Malt and Shovel Brewery and began producing the James Squire product line, borrowing the name and narrative of a famous Australian convict brewer and brazenly using it as a marketing smokescreen to hide the sobering corporate fart. Meanwhile, the original Matilda Bay brewers went and founded the Little Creatures brewing company in 2000. They also produce White Rabbit, which was bought by Lion in 2012.

The other famous Australian duopoly, Coles and Woolworths, can smell profit in a portaloo and are muscling into the beer market. With their own line of ‘craft’ brews, Coles released Steamrail Ale and Woolies launched Sail and Anchor. Even Coca-Cola Amatil has dipped into beer with its Arvo Premium Lager and Alehouse Summer Gold product lines. These beers unashamedly copy the marketing styles and often the faux ‘craft beer’ look from Lion and CUB, to the point of being a laughable parody of a parody. The supermarket giants can then flog off this product in their own chain of bottle-o’s like Dan Murphy’s and BWS. But this is retail warfare. Keg beer pays 40% less excise tax than its bottled counterpart, so the big margins in the brewers’ war are made in the bar.

Tapped-Out Taps: The Corporate Giants That Own Your Local

Many punters might not be aware that their favourite pub, hotel, bar or club is essentially sponsored by either Lion or CUB. A ‘tap contract’ is an agreement between the publican and the brewer, where the publican exclusively reserves a majority of their taps for the brewer’s product line in exchange for keg discounts, bar upgrades, tap instalments and maintenance. This, in effect, reduces the cost of the brewer’s product at the tap, which allows the price of Big Beer to be pushed down to four or five bucks a schooner.

Most bars take up the offer by Big Beer – why wouldn’t they? In the publican’s eye it’s free money to keep still-popular beer on tap. Some pubs even rely on these deals to remain profitable.

So what’s the problem? Smaller brewers don’t have the money or size to offer such tap contracts, and are locked out of the market. If they manage to get a tap at a trendy bar, it’s still difficult to compete with the low price of the Big Beer lines. So that’s when they usually sell out to the big boys, and are rolled into the product lines of Lion or CUB.

For many pub junkies this isn’t a problem, as long as the beer is cheap. But Australians are being denied a whole universe of incredible and tasty beers so long as small brewers can’t provide these new products on a profitable scale. There is very little diversity in Australian beer, and Australians will always have crap taste in beer as long as crap beer is the only option available.

But is oligopoly the natural state for any beer market? Looking overseas tells us the answer is no. Entering a bar in Denver, San Diego or Portland is a beer lover’s wet dream, with over one hundred different beers on tap in some places. This is because in America a contract for 80% of a bar’s taps would be illegal. But here, it’s as Australian as a drive down to the chippo in a beat up Holden.

It’s Getting Bitter: The War On Big Brewers

Now the competitive heat on Lion and CUB has been turned up, both from other big corporations like Coles, Woolies and Coke, but also from small breweries — who, against all odds, are securing some small wins. So Big Beer is coming down on the small guys hard, and pushing more generous tap contracts to isolate smaller players, according to the Sydney Morning Herald.

Fortunately, the sour smell of tap contracts has reached the nose of the competition watchdog, the ACCC. There is currently an ongoing investigation into the draught beer market by the ACCC, which may see a more level playing ground for smaller, locally owned craft brews.

There is also a fight to protect the unique appeal and market position of craft brews that Big Beer has hijacked for a marketing ride. In April, CUB received infringement notices totalling $20,400 for marketing its licensed Byron Bay Pale Lager as being made in Byron Bay, when the CUB version was brewed over 600 kilometres away.

“Many small brewers cater to consumers who prefer to support small, niche businesses. When large companies portray themselves as small businesses, it undermines the unique selling point that such small businesses depend upon, and it misleads consumers,” ACCC Chairman Rod Sims said.

Along with a foamy beer, another Australian self-romanticism is that we barrack for the underdog. Many may argue that this is a classical portrayal of Australian identity rather than a modern one, but fuck it: cheers to the little guys for sticking it to Big Beer.

Nic Sheehan is a bartender from Canberra.