Emphasis on craftsmanship is paying off

CHANGING tastes in Australia have led consumers away from traditional beers towards craft beers, ciders and wines, creating a competitive market for craft brewers, says IBISWorld in a recent analysis. The industry has benefited from changing consumer tastes, particularly the move towards premium beer and the emphasis on quality over quantity across the liquor retailing landscape.

The Craft Beer Production industry has fourished over the past decade, reports IBISWorld(www.ibisworld.com.au/). In the five years through 2013-14, industry revenue is estimated to increase by a compound annual rate of 10.1% to $160.6 million. This includes an increase of 7.1% forecast for 2013-14.

The industry has expanded dramatically to include nearly 150 breweries across the country, producing a dizzying variety of styles and flavours. Despite the presence of major brewers such as Lion and Foster’s that have made a number of key acquisitions with the beer segment, the industry is highly fragmented. Most notably, Lion’s recent acquisition of industry mainstay Little World Beverages has led to the company becoming the largest player in a highly competitive industry. SABMiller’s acquisition of Foster’s in 2011 further shook up the industry, as the world’s second-largest brewer looked to cement its presence in Australia.

IBISWorld industry analyst Naren Sivasailam said, “Despite falling per capita beer consumption and increased awareness of the health risks of excessive drinking, craft beer sales have remained resilient largely due to the changing tides of consumer taste.”

Consumer preferences will continue to sway towards premium and craft beer, with an increasing emphasis on small, seasonal batches with a regional or local focus. “Increased wine and cider consumption in lieu of beer will pose a small but growing threat to the industry,” Mr. Sivasailam said.

Craft producers are expected to offset this through an increase in innovative offerings and niche products, such as an increase in Belgian, French and German styles, along with increased promotional and marketing activity that aims to inform consumers about their unique flavours. The threat of the supermarket duopoly and its effect on retailing is expected to continue into the future, especially as Coles and Woolworths look to enter the private-label and branded craft beer market.

The Craft Beer Production industry has a medium level of market share concentration. The industry’s major players, Lion and Foster’s, are also the largest players in the broader Beer Manufacturing industry and have substantial resources that are unmatched by smaller brewers. Despite this, the highly fragmented nature of the industry has allowed a number of smaller breweries to grow and fourish as consumer tastes have shifted away from traditional beer such as VB, XXXX and Tooheys. (Photo . wizdaz@Dreamstime.com)