Beer battle coming to a head – The rise of micro-breweries

With beer consumption in Australia at a 50 year low and mainstream beer manufacturers suffering a drop in sales, micro-breweries have noticed a gap in the market and working over-time to fill it.

Interest in high-quality craft beer is gaining momentum and as a result, production is increasing.

According to brewer Will Tatchell, his production has increased from less than 30,000 litres each year to more than 100,000. Tatchell explained that craft beer is currently the only sector of positive growth in Australia’s beer making industry.

"More and more micros are popping up, and they're getting bigger and bigger all the time," supplier Sandy Ross said.

Craft beer consumption in Australia has continued to rise, and currently accounts for about one to two per cent of the total beer market.

Once a favourite for beer elitists, specially-brewed beers have flooded the market with a wide range of hops, syrups and flavours being sourced from all around the world.

As the weather heats up and the time comes when most of us will start thinking about what we’ll be drinking come boxing day, we look at some of the best products on the market and talk to industry experts about what’s next for this exciting industry.

Kosher beer

Old Time Brewing is a company operating out of Victoria which says its range of premium lager would win hands down against the competition.

Marketing manager, Mike Fennel says the beer, which has no preservatives or additives, is smooth, easy drinking and easy on the palate, which makes it different from other lagers.

“People don’t want to buy bitter beers. The market is changing,” he told Manufacturers' Monthly.

While lager may not be the first product to come to mind when we think about specially crafted beverages, Old Time Brewing has a distinct point of difference, being the only kosher certified beer on the market.

Fennel says that being kosher certified is no mean feat and that the guidelines are “the most strict in the country ” and involves going to the field where crops are grown to ensure guidelines are met ‘from the ground up.’

“We got involved with Kosher Australia because they have quality products that are safe and taste great,” he said.

“If you’re going to make a beer, why not make it the best beer you can taste?”

Next for the company is a pear cider with reduced levels of sulphate, with production due to commence before Christmas.

Fennel is also keen to tap into the mead market and expects the product to be the next big success story in the Australian beverage market.

Old Time Brewing is currently distributing right across Victoria and is also selling into bottle shops in New South Wales.

Pressure from the big boys

Japanese owned giant Lion’s recent takeover of Little World Beverages shows how the niche beer manufacturing market is susceptible to the pressures of market competitiveness, and that even with great-tasting products, expansion and marketing are the key to long-term success.

The Australian company, which brews brands including Little Creatures and White Rabbit beers, was created 13 years ago and co-founder Howard Cearns said the takeover process was an emotional one.

"I think there's a little bit of emotion amongst the guys affectionately remembering how the staff tended to call themselves ‘creatures’." 

{^image|(width)400|(height)225|(mouseoverheight)366|(url)~/getmedia/489c6d54-d377-4ff7-8768-6ad7899a745b/coke.aspx?width=400&height=225|(align)left|(behavior)hover|(ext).jpg|(originalheight)366|(hspace)10|(mouseoverwidth)650|(style)float: left;|(vspace)10|(originalwidth)650|(sizetourl)True^}Small breweries are also expected to feel the pressure as Coca-Cola Amatil announced they will move towards expanding into the premium beer market.

CCA is currently subject to a restraint not to sell, distribute or manufacture beer in Australia until 16 December, 2013.

However, an agreement with the Australian Beer Company will see CCA lend up to $46 million to the company which will be used to assist with the acquisition and expansion of brewery near Griffith, NSW.

CCA’s group managing director, Terry Davis said "this new agreement with Casella will give CCA the opportunity to access a world class, low cost brewery which will enable us to re-enter the premium beer market in Australia after 16 December 2013 with sufficient initial manufacturing capacity to cater to approximately 15 percent of the premium beer market in Australia.

“CCA’s large scale sales and distribution expertise and experience, combined with the draught and packaged brewing capability of the Australian Beer Company, will provide international beer companies after 16 December 2013 with a uniquely independent route to market in Australia and the ability to partner with the leading non-alcoholic beverages and spirits partner for the licenced trade.”

However, the decision does not seem to be scaring away the niche crafted brewers from entering the market.
The Morpeth Brewery and Beer Company, run out of a small room at the Commercial Hotel, produces 200 litres of beer a brew their micro brewery.

Brewer Dave Allen says that the “move to craft beers and speciality beer is growing.”

“It is a sector that is growing faster than the mainstream,” he said.

And while Allen’s beer might never reach the scale of other specially crafted brands, his story shows how consumers are responding positively to pushes from the smaller players by giving crafted beer space to flourish in a saturated market.

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