Australia / Analyst Insights
Beer manufacturers stagnate while wine producers prosper

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by Bao Vuong
Sep 20 2016

While some companies enjoyed a notable uptick in revenue growth over 2015-16, others stagnated as minimal innovation limited revenue growth. IBISWorld has published a list of the Top 500 Private Companies (ranked by revenue), in conjunction with the Australian Financial Review, to gain an indication of how both individual companies and overall industries are performing. Based on the list, Casella Wines Pty Ltd and Coopers Brewery Limited have had contrasting years despite both manufacturing alcoholic beverages.

Similar to numerous other Australian wine producers, Casella Wines has struggled with an oversupply of wine pushing prices down and squeezing margins over the past five years. However, according to IBISWorld’s 2016 Top 500 Private Companies List, Casella Wines had some of the strongest growth 2015-16, with a 20.2% increase in revenue. While Casella Wines is only Australia’s fourth-largest wine producer, the company is recognised as one of Australia’s largest wine exporters. This emphasis on export markets hurt company revenue over the three years through 2013-14. However, a subsequent depreciation of the Australian dollar improved wine pricing, while demand for Australian wines has been increasing in the United States and from the growing Asian middle class, particularly in China. These factors have helped Casella Wines jump 19 places to reach 104th on IBISWorld’s 2016 Top 500 Private Companies List.

Unlike the wine production industry, which has been volatile over the past five years, the beer manufacturing industry has exhibited stable (if subdued) revenue growth over the same period. This has resulted in Australia’s largest locally owned beer manufacturer, Coopers Brewery, falling five spots this year to reach 234th in the Top 500 Private Companies List. Changes in culture and consumer attitudes have resulted in declining per capita beer consumption, and increasing competition with other alcoholic beverages, like wine and ready-to-drink spirits. Despite these adverse factors, revenue for Coopers Breweries grew by 0.7% over 2015-16, to $239 million.

A growing trend towards premiumisation has helped counteract these negative factors. As beer drinkers have been purchasing more varied product offerings, such as premium, craft and internationally branded beers, increased per-unit prices have offset declining consumption. The diversification of consumer tastes suggests that companies such as Coopers Brewery would benefit from targeting premium and craft beer drinkers. However, these trends have not yet adequately counterbalanced declining per capita beer consumption, with revenue for the beer manufacturing industry expected to have fallen by 0.6% in 2015-16.

Culture and attitude changes, and increased health consciousness have significantly affected beer and wine sales over the past decade. Per capita alcohol consumption is expected to continue falling over the next five years, and higher domestic pricing is anticipated for wine grapes and coarse grains. As a result, revenue for beer manufacturers is set to decline by an annualised 0.5% over the five years through 2021-22, and revenue for wine producers is set to slow to an annualised 2.4% over the same period. However, wine and beer manufacturers still have growth opportunities to pursue. A preference for high quality is expected to drive solid growth in premium beers, craft beers, sparkling wines and ciders, with higher sales in these segments anticipated to help counterbalance the limited growth in mass market beers and wines.


Related companies:

Casella Wines Pty Limited

Coopers Brewery Limited