More on the beer duopoly in Australia

[yankinoz]

Pubs are “a goldmine for them and a coalmine for us,” in the words of an Australian craft brewer. By them he means the Big Two brewers Kirin (Lion Nathan) and SABMiller.

The quote is in a Saturday (May 31) Melbourne Age article on beer, specifically how the Big Two muscle competing microbrews and Cooper products out of taps in pubs. To the pubs they offer discounts and equipment in exchange for exclusive or near-exclusive tap access and choice spots in displays of bottled beer. Pubs turn down the offers at their risk, especially the smaller pubs in suburban markets. Exclusivity deals extend to apparent craft beers the Big Two have acquired, such as Matilda Bay, Little Creatures, Squire, White Rabbit and Redback.

Last year a Financial Review article documented the Big Two's exclusivity contracts with Australian sports venues. The push complements their focus on advertising at sports events, marketing that small breweries cannot match.

Independent brewers of small to medium size gave us the the variety and quality of beers we enjoy. Whilst big multinationals can make and offer a wide variety of good beers, they have limited interest in doing so. In both Australia and in the US, the giants have a long history of reducing the variety of styles they offer, focusing their marketing on flagship lagers or light clones that have become increasingly bland over time. The aim is to recruit new drinkers with easy-drinking brews and make them loyal customers for life. It works. I wish I had a dollar for every time I've run into lifetime drinkers of VB or Budweiser.

In both countries the trend only reversed when craft brewers grabbed growing market shares. Then the giants moved to crowd out or buy the independents. Make no mistake: the aim is to knock out the pests, not to offer a wide choice.

The Age article notes that exclusivity contracts that are common in Australia are illegal in the US. That's true, but the US giants—Anheuser-Busch Inbev and SABMiller/Coors—pursue other ways to crowd competitors off shelf space and rows of taps.
If I were an Aussie commercial brewer, I'd want reform of a tax system that punishes sales in small kegs, the life blood of many a US microbrewery. I'd demand the same exemption from excise tax on the first million dollars of sales each year that Aussie wineries already get. The pollies must be chardonnay-sippers, and I wonder if there's been a beer-swilling PM since Hawke.

In the US the giants try to crowd independent brewers off the shelves of liquor stores. Australia's situation differs because the two supermarket giants own nearly all the shops, including Dan Murphy, First Choice, Liquorland, BWS and Vintage Cellars. The retail duopoly has the clout to battle the brewing duopoly, and their stores do a fair job making available imports and Australian beers that Kirin and SAB Miller do not own. But beware. In a battle of Big Two brewers versus Big Two retailers, the consumer could yet be the loser.

Push the panic button if the rumour is true that Anheuser-Busch InBev is trying to take over SABMiller. ABI is notorious for bullying tactics aimed at establishing regional monopolies. They cut corners brewing their flagship beers Becks, Budweiser, Corona and Stella Artois, in so doing lose old customers, but make up for it by jamming shelves in new markets. Their flagship beers along with Bass, Franziskaner, Labatt, Leffe, Lowenbrau, Modelo and Spaten make up a good share of the beers sold in Australian liquor chains that SABMiller and Kirin do not own.

If worst ever comes to worst, keep the faith and keep brewing at home.

 

[Not For Horses]

I feel the need to hit like on that post but I just can't.
Frankly it scares me. No good can ever come from a duopoly such as this.
Nice write up though!

 

[brewbienewbie]

If I were an Aussie commercial brewer, I'd want reform of a tax system that punishes sales in small kegs, the life blood of many a US microbrewery. I'd demand the same exemption from excise tax on the first million dollars of sales each year that Aussie wineries already get.

This would be such a good thing for microbrewers, it'd be amazing.

 

[itmechanic]

I'd demand the same exemption from excise tax on the first million dollars of sales each year that Aussie wineries already get.

Demand away, we have been doing this for years, as long as the government is making money off us nothing will change.
As a microbrewer, its nice to be hopeful about excise reform, but in the mean time we just have to get on with it.

 

[Mardoo]

ABSOLUTELY!!! The market reforms you mention are likely crucial to the long term success of craft resurgence in OZ. I say likely because there may be another way around, as the cultures are quite different. I'm a former (I ain't going back) Yank in Oz and looking at the situation here I feel like craft brew will never be given the chance by the folks with power to get its foothold. However Aussies are a determined lot, and there's far more appreciation of genuine craft (in every discipline) in the culture here than in the States. So if we can't get the political changes, which some folks involved in the effort to change them have said to me is possible, hang on to determination and distrust of the corporate principle. That's my toilet thought for the morning.

 

[mr_wibble]

Beer quality aside, the local brewer down the road from here (Blue Tongue) was bought out and then just shut down.

 

[Spiesy]

Beer quality aside, the local brewer down the road from here (Blue Tongue) was bought out and then just shut down.

Was not a fan of their beers at all.

Great article though. Hopefully the ACCC's investigation into the anti-competitive business practices that the "big two" adopt yields some results.

 

[wynnum1]

http://www.theage.com.au/business/competition-probe-taps-into-big-brewers-shutout-20140530-399t3.html