The Beer industry in Australia – An Overview

Skyline von Sydney in Australien
© / Dan Freeman

The Australian beer industry has suffered on account of declining consumption in the last decade. However, despite this significant decline in overall beer consumption, the country’s beer market remains one of the most lucrative and competitive. Recent acquisitions by leading global brewers in the country’s beer industry is a testament to it.

The Status of the Australian Beer Market

Dominated by three brewers, the Australian beer market has been in long-term decline for the past decade as Australian drinkers have been choosing other alcoholic beverages, like wine, over beer. Per capita beer consumption has dropped around 20 % during the last decade. Beer consumption in the country is 60 % lower than it was at its peak in 1974-75.

Beer consumption in the country has also declined on account of a shift away from alcohol by a section of the population. The Australian Bureau of Statistics (ABS) data shows alcohol consumption per capita today at a 55-year low.

According to the ABS, 84 percent of Australians drink within recommended guidelines. That’s two standard drinks a day. Binge drinking is at its lowest level, down from 21 percent in 2004 to 16 percent today.

Statistik über die Entwicklung des Alkoholkonsums in Australien von 1960 bis 2017

In one of the largest acquisitions in recent years in the Australian beer industry, Japanese brewer Asahi Holdings acquired a majority stake in the country’s largest brewer, Carlton & United Breweries. Australia’s competition watchdog, ACCC, did not oppose the acquisition as Asahi offloaded some of its cider and beer brands after the consumer watchdog flagged concerns on the deal leading to lessening the competition in those market sectors. This led to Asahi putting its Strongbow, Bonamy’s and Little Green cider brands and the Stella Artois and Beck’s beer brand licences up for sale.

“The major breweries represent some 90 % of all beer sales in Australia, but, interestingly, they also account for around 65 % of the domestic craft beer market. There has been much noise about the rise of craft or independent beers, but the numbers show that the 450 or so small breweries make-up about 3.5 % of total beer sales in Australia​,” says Brett Heffernan, chief executive of the Brewers Association of Australia, which represents Australia’s leading beer makers.

Covid-19 impact on Australian beer industry

Already struggling for volume growth, the Australian beer industry was badly hit by the still ongoing Covid-19 pandemic. The country’s brewers registered no sales in the month of April and reduced sales in the months of May and June.

The situation for the beer industry started to stabilize in the month of July, but it is nowhere near the level of pre-Covid days. Overall, Australian beer sales are expected to fall by 10 to 13 % in 2020. Leading brewers operating in the country expect that domestic beer industry and consumption will not rebound to the 2019 level until at least 2023.

Leere Restauranttische während der Corona-Pandemie
© / Markus Winkler

High taxes on beers in Australia

The beer industry is highly taxed in Australia. In fact, the single biggest cost in the price of an Australian-made beer is tax. Beer tax and GST account for 42 per cent of the price of a typical carton of full-strength beer. Australians pay an average of AUD 2.26 per liter of alcohol and according to a report commissioned by the Brewers Association of Australia, these tax rates stand as the fourth-highest beer tax amid developed countries. These excises are a massive money spinner for the Federal Government coffers, with estimates putting the amount the Government raked in from the booze tax at approximately AUD 3.6 billion last financial year.

Beer from Australia – The Major Brewers

The Australian beer industry is dominated by three major brewers. The big three brewers have histories dating back more than 150 years in one form or another, which has given them a wealth of experience in perfecting the equation between variety, quality and price.

Carlton & United Breweries

Carlton & United Breweries, popularly known as CUB, is an iconic beer company founded in the mid-19th century in Australia. It is the largest brewer in the country. The company possesses a diverse portfolio of over 400 brands, and produces some of Australia’s highest selling beers. Headquartered in Melbourne, Carlton & United Breweries employs nearly 1,600 people across five breweries and various offices around Australia. Before the recent acquisition by Japanese brewer Asahi, it was a subsidiary of AB InBev as part of AB InBev’s takeover of SABMiller. 

Australische Biere
© / Timothy Hales Bennett

In June 2020, Asahi officially took over Carlton and United Breweries. Before the deal, Asahi previously held approximately 30 % of the cider market, and 3.5 % of the beer market in Australia. The completion of the AUD 16 billion deal marks the Japanese firm’s takeover of AB InBev’s 48.8 % market share. The sale was originally announced on July 19, 2019.

Asahi Beverages Australia outgoing chairman Peter Margin said it was an “exciting time” for the group as it embarks on the next chapter, taking over from Belgian drinks giant AB InBev in what the latter called one of its most profitable markets globally. “The acquisition of CUB will mean that Asahi Beverages is able to offer customers and consumers an even broader range of great tasting beverages with the addition of some of Australia’s most popular and well-loved beer brands,” according to Margin.

CUB insisted that it would continue to operate “in much the same way as it does today” becoming a business division alongside Asahi Premium Beverages, Asahi Lifestyle Beverages and Asahi Beverages NZ. However, the sale was dependent on stipulations from the ACCC that Asahi offload a number of cider and beer brands including Strongbow, Bonamy’s and Little Green, as well as Stella Artois and Beck’s. As part of the deal, AB InBev granted Asahi rights to commercialize AB InBev’s portfolio of international brands in Australia.

Carlton & United Breweries’ portfolio include Foster’s, Victoria Bitter and Carlton, alongside craft brands 4 Pines and Pirate Life. Asahi’s beer brands include Asahi Super Dry, Peroni, Mountain Goat, Green Beacon, Cricketers Arms and Two Suns. It also owns the Schweppes soft drinks business in Australia.

After acquiring CUB, Asahi has emerged as the top beer company in Australia, growing to nearly 40 % of the market from a mere 1 % before the purchase. The Japanese buyer bet that beer consumption would rise given the country’s immigrant-driven population growth, boosting operating profit, which totalled 201.4 billion yen (USD 1.87 billion) in 2019. “We’re facing a tough business environment with the coronavirus crisis, but we will seek further growth as a premium beer brewer,” says Asahi President Akiyoshi Koji. The premium market, including craft beer, was growing 7 % a year worldwide before the pandemic.

Lion Brewery – eine Tochter der Kirin Holding

Lion Brewery is one of the two large brewers in Australia. The company brews popular beer brands such as Corona, Budweiser, Guinness, and Beck’s as well as local brands such as XXXX GOLD, Tooheys, Speights, Steinlager, Lion Red and Brown. Owned by Japanese brewery Kirin Holdings, Lion faces stiff competition from Carlton & United Breweries. In 2009, Japanese brewer Kirin purchased Lion Nathan brewery for AUD 2.5 billion.

Mann trinkt Bier in Sydney Australien
© / Damon Hall

Lion Nathan was formed through the merger of two major New Zealand companies, LD Nathan & Co. and Lion Corporation, in 1988. Both companies operated diversified holdings. LD Nathan centered around department store and supermarket holdings, which included Woolworths, 3Guys, and others. Lion focused especially on its breweries and beer brand, which included the top-selling Lion Red brand.

The roots of Lion Nathan’s brewing interests lay in the first half of the 19th century. In 1840, two Auckland-based liquor distributors, John Campbell and William Brown, founded the Hobson Bridge Brewery. Hobson Bridge eventually changed its name, becoming the Domain Brewery, before merging in 1898 with another company, the Albert Brewery, which had been founded by Louis Ehrenfried in 1878.

Declining beer consumption in the country forced the company to close down its South Australia’s West End Brewery after 160 years of operations in October 2020. Having started up in 1859 on Hindley Street on Adelaide’s west edge, the brewery grew in a series of mergers until 1983 when it moved from the city to its current premises in Thebarton where it made West End Draught and Southwark Stout.

Lion Australia managing director James Brindley blamed the decision to close on “long-term trends and the ongoing viability of the brewery”. “Over the last few decades consumer preferences have changed, the beer market en masse continues to decline and is now at its lowest per capita consumption ever recorded in Australia, while a number of craft breweries have sprung up so competition is intense … and the cost base continues to increase,” according to James Brindley.

„Cheers, Mate!“ – Craft Beer in Australia

Australia’s craft beer industry is worth over AUD 800 million and grew 6.2 % from 2015 to 2020, while Australia’s beer manufacturing industry as a whole declined 1.8 % in the same time period. This drop is attributed to consumers increasingly spurning traditional beers in favor of higher priced premium and craft beers.

A senior executive from a leading brewing company assesses the current situation as follows:

“Currently, brewers in Australia are struggling with a customer base that is less loyal and more keen to experiment across beer brands. There is still loyalty but less loyalty than there was 30 or 40 years ago. Beer is still very parochial among states and beer lovers still have their favorite brands. The only difference now is that consumers — versus 30 to 40 years ago when they only had one or two beers in their repertoire — now have five to seven. They can choose between five to seven brands rather than one or two and craft beer is now one of those seven. Craft has been great for the category — it has brought romance to beer. People are now having more interest in how beer is made and more interest in the stories behind various beer brands, which is fantastic.”

You will learn more about Australia’s or other beverage industries at drinktec, which will be held from September 12 to 16, 2022, in Munich. Would you also like to showcase your innovations in this area? Join us at the next drinktec.

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Verlag W. Sachon

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