Craft brewers targeted by beer giants
The appetite for craft beers continues to gain momentum, which has led to multinationals including Lion and Carlton United Breweries to set their sights on a bigger craft brewery acquisition strategy.
The pair has already picked up several leading independent craft brewers, adding to their staple product ranges.
In 2021, Lion acquired Australia’s largest independent craft brewer — the Byron Bay-based Fermentum.
The $ 500 million acquisition put popular brands Stone & Wood, Two Birds and Fixation in its pocket.
This was the biggest industry news of 2021.
“It certainly put a ripple through the industry but it’s very difficult to predict what will happen this year because we’re not privy to the strategies of the multinationals,” Independent Brewers Association (IBA) general manager Kylie Lethbridge said.
“But we do know that they’re going hell for leather to diversify and I don’t doubt that over time more independent craft breweries will be purchased.”
In the past 10 years independent craft breweries including Little Creatures, Mountain Goat, Pirate Life, 4 Pines, Green Beacon, Balter and Feral Brewing have all been picked up by multinationals.
Even soft drink manufacturers like Coca-Cola Amatil have got in on the act.
Meanwhile, seeing the appetite for craft beer consumption, bottle shops owned by Coles and Woolworths are also creating craft beers.
Lion has so far remained quiet about its acquisition strategy for 2022, but is expected to slow down this year after the Fermentum acquisition.
According to Queensland University of Technology retail expert Professor Gary Mortimer more independent brewers will be bought out by multinationals and larger companies.
“Mainstream beer consumption is falling and craft beer consumption is rising,” he said.
“The whole mindset has changed. If we go back to the ’70s it was all about XXXX and VB and volume consumption. There was a lot of heavy drinking.
“Now we’re preferring craft beers. Australian beer drinkers’ tastes have changed.”
There are approximately 625 independent craft breweries in Australia contributing about $2 billion annually to the economy including: Young Henrys Brewing and Gage Roads Brewing and many microbreweries.
The industry employs about 7000 people (around 50 per cent of jobs in the sector), but only has an 8 per cent market share which the IBA is looking to increase to 15 per cent over the next ten years.
Lethbridge says independent breweries have not been impacted by COVID as badly as other industries and noted that businesses unreliant in keg sales would be better placed to ride out Omicron and whatever the pandemic next has in store
“I did an interview last November and I said we were well on the road to recovery and things were fantastic,” Lethbridge said.
“Independent brewers are well supported by a loyal following and online sales were going through the roof, although that did not mean they have come out of the pandemic without doing it tough.
“But the impact this current situation is having on hospitality and production is quite significant.
“Any brewer that has hospitality as a part of their operation, which is quite a lot of our industry, is very challenged with staff being sick or isolated and then there are the supply-chain issues and availability of materials.”
However, the very nature of the craft beer sector is the brewers’ best form of defence as the independent companies build a loyal following with strong community links and can pivot quickly to new ventures and targeted marketing campaigns – a trait missing from the multinationals.
Irit Jackson, 26th January 2022
