In this third instalment in my Who Owns My Beer series looking at the breakdown of breweries and brands in my local BWS craft beer fridge, I look at the continued rise of brands from Endeavor Drinks Group’s beverage arm, Pinnacle Drinks, how brands from indie breweries are faring, a surprise or two from the big breweries and some expected results from the craft beer ‘collectives’.
I’ve also built a website with interactive charts displaying the supporting data. There’s a link at the end of this story.
Setting the scene
2023 may be remembered as a turning point for Australian craft beer. The growth of the craft beer industry, which has been gradually increasing for more than two decades, is coming to an abrupt halt. While some predict armageddon for all small breweries, others point to an industry achieving equilibrium with others and the natural attrition of optimistic, underperforming, or even poorly managed businesses in a saturated market.
It’s a similar story internationally. The closure of pioneering, internationally recognised breweries, such as Anchor Steam, is mirrored locally by the closure of breweries like Two Birds, which stamped its own unique legacy on the Australian brewing industry. The shutdown of New Zealand brands like Deep Creek is as shocking as the departure of Melbourne breweries Exit Brewing and Fury & Son.
The deceleration in the growth of the Australian brewing industry has been attributed to a range of factors. These include the impact of cost of living pressures on consumers, rising production costs, overcapitalisation in expansion efforts, and obligations to the Australian Taxation Office (ATO) deferred during the COVID-19 pandemic.
In addition to closures, many breweries have entered voluntary administration (VA). Brisbane’s Ballistic Beer was the first high-profile example. The brewery initiated the administration process in January but managed to avoid liquidation. In March, creditors approved an $850,000 investment from an outside group. The investors acquired a majority share in the brewery, giving creditors a return of ten cents on the dollar.
Small breweries entering VA became commonplace throughout the rest of 2023, with varied outcomes. Melbourne brewery Bad Shepherd was a case of one operation which managed to recover. In an interview with Brews News, brewery owner and founder Derek Hales cited the rise of white-label brands as a factor in the increasingly challenging marketplace.
White label or ‘faux craft’ brands, brewed under contract for operations like Endeavour Drinks Group’s Pinnacle Drinks, were also highlighted during a 2023 Federal Parliamentary inquiry. Representatives from the Independent Brewers Association (IBA) and Australia’s largest independently owned brewery, Cooper’s, highlighted the power of the supermarket duopoly and the increasing challenges for small brewers due to the growth of ‘in-house’ brands.
The retailers responded by citing increased consumer demand for locally made products and the dedicated shelf space they set aside for small producers. EDG highlighted better payment terms for small suppliers as a means for small producers to improve cash flow and both retailers reported growth in all their craft beer offerings.
What’s in the fridge
At the time of my analysis, 68 beer products from 32 distinct brewery brands were in the craft beer fridge of the BWS store I’ve used as the subject since 2020.
The total is reasonably consistent with past results. However, in 2022, the BWS bottle shop reduced the craft beer fridge space to only two doors, using the third to accommodate a short-lived flirtation with several ‘fruity beer’ products and ciders.
In 2023, the store reclaimed the space for craft beer, the same as in 2020 and 2021.
Few will be surprised to learn that Pinnacle Drink’s brands have grown the most.
There were only eight beers from four distinct Pinnacle Drinks brands in 2020. Each year since, its presence has grown. There are now twice the number of beer products, an increase from occupying 13.5 per cent of the fridge to 31 per cent.
The count of brewery brands Pinnacle Drinks has created has doubled also. They now dominate the space, with 21 beer products from 9 brewery brands. Neither CUB, Lion, nor the combined IBA Indie breweries feature as many products. Only the combined number of beers from all independent breweries, including Cooper’s, is larger.
CUB, Lion and CCA
Japanese-owned breweries CUB and Lion each have a slightly stronger presence in 2023 than in 2022, but each has taken an opposite path. The number of CUB beers dipped and recovered, totalling fourteen beer products in the fridge now. While Lion’s presence in the craft beer fridge rose, then weakened, to only eight.
The trend seems consistent with the market performance of both breweries. Lion is reportedly losing ground to CUB, restructuring its craft beer business during more challenging times, the effects of which have been signalled by the closure of some Lion venues across the country.
CUB’s brands have been more or less consistent since 2020, with Balter(3), Fat Yak(1), 4 Pines(1) and Mountain Goat(4) all returning for the fourth year in a row. The rebirth of Matilda Bay has added one beer to CUB’s BWS portfolio.
Perhaps somewhat ironically, the highest number of CUB beers comes from SA brewery Pirate Life (4). Notably, none are beers that spurred the brewery’s rise between its foundation in 2014 and its eventual acquisition in 2017.
The makeup of Lion brands in the BWS fridge has changed more significantly. Lion’s New Zealand brands Monteiths and Panhead have gone, leaving only Little Creatures (2) and James Squires (5) as consistent brands across the four years of this study. Acquired Fermentum product, Stone & Wood Pacific Ale, rounds out Lion’s offering, but Fixation and Two Birds are nowhere to be seen.
Coca-Cola Amatil (CCA), owner of early craft beer pioneers Feral Brewing, no longer features any beers in the BWS fridge. Hop Hog was present in 2020 and 2021.
Craft Beer Collectives
Craft beer ‘collectives’ like Mighty Craft (formerly Founders First), Good Drinks Australia (GDA), and Tribe consist of multiple breweries or brands. While their models vary, with some having only a partial stake in the underlying brands and different levels of control, the common thread is the grouping of multiple entities under a collective umbrella.
The total number of products from these groups peaked at six in 2021, accounting for approximately 8.5 per cent of beers in the craft beer fridge. But in 2023, there are almost none.
GDA is represented only by Gage Roads Single Fin, but this is mostly consistent over the four years of my analysis. Tribe hasn’t had a beer in the fridge since 2021, and Fermentum arguably no longer exists since its acquisition by Lion.
Mighty Craft had three beers from two breweries in the fridge in 2020 (Ballistic: 2. Jetty Road: 1). But the beleaguered craft beer incubator, which sold Jetty Road two weeks after the data collection for this analysis, no longer has any beers in the craft beer fridge of the BWS visited.
The number of beers from independently owned breweries, including those from the previously mentioned ‘collectives’, continues to decline. Indie beers accounted for 56 per cent of the fridge space at the peak of Local Luva in 2020, but only 38 per cent in 2023.
SA brewery Cooper’s, which does not qualify for membership to the Independent Brewers Association due to its size, has maintained four to five beers in the craft beer fridge over the four years of this study. If the brewery’s beers are excluded, the decline of independent beers is 47 per cent down to 29 per cent.
In terms of the number of indie breweries represented, there’s been little change. Meaning the number of beers from each is less than in previous years. Colonial has three beers in the fridge, which is the most for any indie brewery besides Coopers. All other independent breweries feature only one or two.
But there are some new breweries and beers available in this store. Mountain Culture is an obvious new addition, given its number one place in the 2022 GABS Hottest 100 Craft Beers poll. There’s an additional gluten-free beer, with O’Brien joining Two Bays. Similarly, with alcohol-free, Heaps Normal has increased its presence from one to two beers in the fridge.
Notable absences from previous years are Boatrocker, Bridge Road Brewers, Fixation and even Bentspoke.
Elsewhere in the store
This study has always focussed only on the beers in the fridges BWS designates for craft beer. But it is important to note there are beers considered by most as ‘craft’ elsewhere in the store. Furphy is stocked alongside mainstream options, and Mighty Craft’s cash cow, Better Beer is positioned with other low-carb options.
There is also a small cache of beers from local breweries in the region, but it’s far from the craft beer section.
Except for Cooper’s, Indie beer is trending down in BWS. The two big brewers seem to be maintaining their positions. Collectives and CCA have diminished and now have little to no presence at all. But the growth of EDG’s own brands is evident.
EDG’s contract-brewed beers sacrifice little in terms of quality. They’re aggressively priced, mimic the branding of fellow indie breweries, and often feature shelf talkers highlighting their value.
Pinnacle Drinks brands still fly under the radar of many vocal detractors of Australia’s big brewers. Few social media posts featuring a CUB or Lion-owned brand in craft beer groups are without at least one comment labelling them “not craft”, but they’re less frequent on posts featuring retailer-owned brands. One has to consider whether this is due to the elusive branding, the lack of perceived threat, or simply apathy.
Even within the industry, the question is raised whether breweries like Brick Lane are complicit in the rise of faux craft brands. The brewery produces Pinnacle Drink’s beer at its Dandenong brewery, something it does not attempt to hide.
Contract brewing is a valuable income stream and has been a growth driver for many pioneering indie breweries. Some argue it’s hypocritical to imply that a brewery must be selective or discreet if the partner is a corporate entity when contract brewing for small brands is considered acceptable.
In contrast, others cite a difference between a brewery funded by high-profile personalities to capitalise on a burgeoning industry by producing homogenised beer for big retailers and a community-minded brewery supporting grassroots brands and startups, diversifying, innovating and growing the industry.
A dedicated space
There is truth in the retailer’s claim of dedicated space for local beer. Admirable as it may seem, though, it’s disingenuous. At the store I analysed, I walked past the local options for the first six to twelve months I visited without noticing them. Only when I asked were local options pointed out to me.
I confess they’re not as segregated in other stores, but their local roots still aren’t actively highlighted. Given the retailers claim consumers want local products, wouldn’t they be?
Typical consumer behaviour is to shop by beverage type, style, varietal or flavour. Separating local products excludes them from these patterns. Mixing them with others would be more effective – with shelf talkers to identify locality.
The ‘dedicated space’ claim contradicts the retailers’ approach to their own products, which they masquerade alongside the most popular craft beer brands. Separating them entirely as ‘home brand’ or ‘value’ options would be consistent with their strategy to segregate local products.
In the endless debate over what constitutes ‘craft beer’, it’s interesting to consider what retailers regard as craft, albeit implicitly.
Consider the example of Better Beer. Being low-carb, perhaps it’s sensible to stock it with other low-carb offerings. But does retailer positioning give some credibility to arguments made during the GABS Hottest 100 that it does not qualify as craft? After all, Heaps Normal is stocked with craft beer, not the zero-alc brands.
This kind of product positioning in BWS is generally consistent in other retail chains.
They say Australia is a land of opportunity. And it seems the country’s monopolistic corporate entities are guaranteed to seize on every one. Be it our airlines, media, breweries or retailers, for better or worse, Australians are accustomed to the status quo.
While independent brewers and industry analysts often point to the rise of retailer-owned beer brands as a threat, they also accept that it’s the nature of business. Home brands, be they Black & Gold, No Frills or Home Brand, were on the scene long before Pinnacle Drinks.
The quality of faux craft is difficult to contest. No matter the claims of dishonest packaging, price may be the most significant lever in the current economic climate, making branding irrelevant.
It’s important to remember that white-label brands are one of many challenges for indie beer today. Knowing what to expect for the brewing industry in 2024 is difficult. Recent reporting on inflation shows a glimmer of hope, but any impact will take time. In any case, smart breweries are bracing for more of the same in 2024.
The data from my analysis shows a plateauing of trends. But it’s only a guide, and difficult to be conclusive with data from only one store. I look forward to my next piece. With any luck, I can expand the data collection.
In my last story on this subject, I tried to end on an upbeat note and champion the resolve of Indie brewers. This time, with the conditions breweries are enduring and some cracks appearing in what’s otherwise been a supportive and collaborative industry, I’d encourage everyone to look after each other.
Whether you own or work in a small brewery, are an employee making beer for a multinational or big retailer, or simply a beer lover, I sincerely hope kinder economic times are coming for all of us.
Thank you for reading my work. Don’t forget to check out the website I built to display all the data from the four years of this study (best viewed on a device with a larger screen). It’s something I’m quite proud of. If you’d like to see more, sign up to my mailing list. You can also donate to help fund future studies, analysis and stories.