Australia / Analyst Insights
Hopped Up: Craft Beer Manufacturers Continue to Grow

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by Joshua Fernandez
Mar 04 2019

The Beer Manufacturing industry has shifted away from major brands with generation-spanning brand loyalty towards smaller producers creating more seasonal and unique offerings. The rise of craft brands can be seen through consumer demand for unique and limited-edition flavourings, and support for locally-brewed products that often contain locally sourced ingredients.

Major brewers have responded to the rise of craft beer by acquiring some well-known craft brands, and changing their marketing strategies. The changing market has also forced these major companies to broaden their product range to avoid falling behind.

Lion Pty Ltd, the Australian operation of Japanese-based Kirin Holdings, has acquired several locally owned cult brands in recent years. In 2012 the company acquired Little World Beverages, responsible for the Little Creatures and White Rabbit brands, and has expanded their footprint especially in Victoria and Western Australia. The rapid success of the brand’s Furphy ale, the marketing for which emphasises that it is made in Geelong from local ingredients, reflects the broader direction of the Australian Beer Manufacturing industry.

SAB Beverage Investments – trading as Carlton United Breweries – is the Australian operations of InBev SA/BV, a Belgian beer manufacturer. The company’s Matilda Bay Brewery brand has mirrored the success of other craft-branded breweries. The company has leveraged its large production capacity to profitably produce niche beers such as Beez Neez that appeal to the changing palates of Australian consumers. The company has also started offering its Carlton Draught beer in an unpasteurised form to venues within inner city Melbourne, drawing fussier drinkers to their flagship beer with the promise of a unique experience.

Cooper’s was founded in 1862 and is now the largest locally owned brewery in the country. The company’s marketing emphasises its long history in Australia. The brand’s standard line, which primarily consists of the Original Pale Ale and Sparkling Ale, pre-empted the current boom in craft beers. However, the company has not introduced new products to take advantage of the craft beer boom, and in the 2018 financial year saw its first loss in revenue in six years. The company’s failure to expand and develop its product range in a rapidly evolving market has seen its revenue stagnate. As more and more small labels expand nationally, it has become harder for companies such as Coopers to grow.

Overall, Australia’s growing preference for distinctive craft beers has presented an opportunity for Australian brewers. As major companies acquire more small breweries and craft brewers continue to grow the industry is likely to expand.

Companies mentioned in this report:

Lion Pty Ltd

SAB Beverage Investments Pty Ltd

Coopers Brewery Limited

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