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As big brands get crafty, independent brewers fear losing hard-won ground

·7 min read

One of Australia’s largest independent brewers, Fermentum, parent to Stone and Wood, Two Birds and Fixation, was acquired by multinational Lion last week. It pulls into focus the industry’s potholed pitch, where locally owned, small brewers go up against foreign-funded giants, while consumers are sometimes unable to tell the difference.

Fermentum is the latest in a growing list of independent breweries that have sold to one of the two major alcoholic beverage companies operating in Australia: Lion, a subsidiary of Mitsubishi through Kirin Holdings Company, and Carlton United Breweries (CUB), which, although headquartered in Melbourne, was bought by the world’s largest brewer AB InBev in 2011, and sold again to Asahi in 2020 for $16bn.

Although Australian beer consumption per capita has fallen 20% in the last decade, craft beer is still growing, particularly in the last three to four years, according to the Independent Brewers Association chief executive, Kylie Lethbridge.

Australia is currently home to around 625 independent breweries – classified as such due to their relatively small operations and a minimum of 80% Australian ownership. Two-thirds of these breweries are in regional areas.

These brands are reflecting people’s personality traits … locality is a huge one

Luke Robertson

The beer writer and critic Luke Robertson likens Australia’s attachment to beer to sports fandom. He says that Australians increasingly identify with the people behind the brew – as much as the discovery of new flavours – which leaves some consumers disillusioned when their favourite beer changes ownership.

“A lot of these brands are reflecting people’s personality traits, whether it’s a certain love of music or pop culture … locality is a huge one,” he says.

Following the first major sale of its kind – Little Creatures to Lion – in 2012, the once-independent Mountain Goat, Pirate Life, 4 Pines, Balter and Feral Brewing have also been acquired, while big-brand bottle shops are now creating their own beers to tap into the craft market.

“The increase in these larger businesses producing their own craft to me is an indication that they’re seeing the rise in demand for a different style and quality of beer,” says Lethbridge.

“They are making their own to try and compete with independents. And if they’re not making their own, they’re acquiring other brands to compete for shelf space.”

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Independent brewers make just 8% of Australia’s total volume of beer, but the Independent Brewers Association estimates they employ half of the industry’s workforce.

Together CUB and Lion hold 80% of the market share in Australia, which small brewers say leaves little room in the fridge.

“We don’t compete with CUB and Lion,” says Mazen Hajjar, the founder of independent Melbourne label Hawkers Beer.

“There’s a false assumption that we are in the same market as Lion and CUB. We make beer, yes, but they make mass-produced [beer]. It’s like saying a good restaurant competes with McDonald’s. They both make food, but they’re not necessarily competing against each other.”

They’re using them as another placeholder on the tap

Mazen Hajjar, Hawkers Beer

In Australia, unlike parts of Europe or the US, small brewers say getting their product into a large pub, club, hotel, sports stadium or casino is practically impossible due to tap contracts with big brewers, which lock the venue into allocating a certain percentage of their beer menu to one company’s brands.

In 2014 the Australian Competition and Consumer Commission launched an investigation into allegations of anti-competitive behaviour by big beverage companies, as independent brewers claimed they were being locked out of taps through exclusivity clauses of more than 80% and volume requirements, in exchange for rebates, infrastructure investments and refurbishment loans for venues.

A barman pours a beer at a bar in Sydney, Australia
A barman pours a beer at a bar in Sydney. Small brewers say getting their product into a large venue is practically impossible. Photograph: James Gourley/AAP

In 2017 after examining tap contracts at 36 venues across Victoria and New South Wales, the ACCC found that the impact was “unlikely to substantially lessen competition”. The Independent Brewers Association declared the finding a “body blow”, saying tap contracts restrict independent brewers’ ability to grow.

“[Big companies] are using all these brands to capture another market share of a segment that’s not theirs, and they’re using them as another placeholder on the tap to block brewers from coming on board,” Hajjar says.

Wide brand portfolios mean that in shops, major players can offer options marketed to drinkers who want to buy small and local – something Lethbridge says most independent brands have always prided themselves on, and emblazoned across their packaging.

It’s specifically made for that shop

Luke Robertson

Supermarkets too are expanding their craft beer ranges – while vertically integrating. Coles has added more than 100 craft beers to its shelves in the last 12 months. Some are from small breweries, others are owned by conglomerates and a few are Coles-owned “private label” brands.

Endeavour Group – which counts Dan Murphy’s, BWS and pub chain ALH Group in its portfolio, has also rapidly expanded its private label portfolio in recent years.

Just like independently owned beers, private label cans have unique designs in a rainbow of colours to capture the imaginations of different drinkers, whether they’re hooked by a surfy, edgy or minimalist motif.

“It’s specifically made for that shop and to target a market,” says Robertson. “They’re leaning on that same brand proposition.

“I think a big part of the market sees them as a bit fake or a bit deceptive,” he says. “But that’s certainly not to say they taste bad at all.” Private label brands have even performed well in beer awards.

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Robertson says the price point and accessibility of supermarkets’ own labels sways some craft-oriented consumers, but for others, any mass-produced beer is simply less exciting.

“They’ll be more conservative when they’re putting products out [to] an inherently mainstream audience … whereas a smaller brewer might be making a one-off for their local taproom or their own bar … so they can be a little bit more experimental, more creative.

“Without independent brewers you couldn’t put some of those products in Liquorland or Dan Murphy’s that are now being made by Dan Murphy’s.”

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When speaking of the attachment some beer consumers have to brands, he says “Stone and Wood is a really good example”.

“They have spent the last 10 years really building their brand on independence and making very clear statements about what their independence means to them and how that relates to their brand and their ethos and when that gets taken away from you as a consumer who’s bought into that, suddenly you feel like you’ve been lied to.”

Stone and Wood’s founder Jamie Cook, also the former chair of the Independent Brewers Association, has said their brand was always more about a ‘conscious business model’ than independence. “We wanted to find a custodian that would continue those obligations and commitments to the community, and Lion stepped up to the plate and provided that,” he told Brews News. “At the end of the day when founders decide that they want to pass the custodianship on … we do that.”

The Lion Australia managing director, James Brindley, said: “We want to grow what they’ve started, giving their people and beers even more reach across the country.”

With a flush of colour and diversity beyond the familiar heritage logos at many bottle shops, and big brands following the template independents spent years forging, ultimately Lethbridge says the only way to know if a beer is independently owned is to ask.

“I would encourage people to either look out for that certified independent seal on the packaging, it’s pretty easy to spot … or just ask your local pub, bottle shop or taproom.”

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