Category Archive: Beer News

What happens when a small brewery sells out to a multi-national

There has been a lot of talk recently in the beer industry about when a small brewery sells out to a multi-national company. Just recently Lion has bought out Byron Bay Brewing, last year Asahi bought out Mountain Goat and American favourite Ballast Point was bought out by Constellation Brands for $1 Billion.

Unless you are a shareholder or an economist, you probably don’t care what happens to these businesses too much, BUT if you love craft beer like us, you do will definitely care what happens to the BEER ! So what does happen? Well before we answer that questions, let’s clarify something, this article is an an OPINION, it is not based on any hard core statistical analysis, so just keep that in mind.

Well the first thing that generally happens is that the decision sparks some sort of outrage (or at least fervent discussion) about what this will mean to the beer. The hard core craft enthusiasts will say that that is the end, it’s all down hill from here and may even refuse to buy the once loved beer on principle alone. Whilst we don’t really subscribe to that theory, it does carry some weight because one of the things people love about a craft brewer is that is basically a hand full of local people, working really hard and by supporting this beer, they are supporting that local business and community. Of course when the take over comes in, the money is now going back into a big commercial enterprise which may run their operations off shore, so local money ends up going overseas.

That leads to the next logical argument which is that it becomes all about profit. Many small business owners around the world work countless hours in their business sometimes with no wages for years and when they finally start making a profit, they pour all of that money back into the business. This is common in most small businesses and is in most cases how they can afford to grow. When a big company steps in they are looking for commercial opportunity to expand their range, their brand, their appeal, but most of all to expand their profit making capabilities. One of the main motivations is to impress their shareholders so they can continue to grow. So how does this effect the operation of the business and the beer? Well it could impact on the brewery in a number of ways. Firstly, lets look at the positives. The small brewery now has some serious financial backing which would allow it to invest in to new equipment, increase production, employee more staff and even move into new premises. The down side could be that with a focus on profit, the new owner looks at ways to cut costs, with the real fear being this could be in the ingredients or brewing process which would effect the precious output which is of course the beer we (used) to love. To date, in the takeovers that we have seen there is little evidence to support this although there are plenty of conspiracy theories out there that say the beer has changed since the take over.

So what else can happen? In our opinion, the real change and danger of a takeover occurs when the new owners want to change the direction of the business they by out. Whilst most brewers looking to sell out, would probably try to be true to the brand they worked hard to develop, even after the sell out the fact is that sometime down the track, this can happen. Probably the best example of this is the Western Australian brewer Gage Roads.When this beer lover visited their brewery in Freemantle more than 10 years ago, they were at the epicenter of Craft Brewing in Australia. They were all about the beer with their direct-to-the-drinker brewery, where you could tap one of the freshest beers in the country and although by today’s standard the range was quiet limited, at the time they were well ahead of the game.

So what happened to Gage Roads? Well around 2010 they sold a 23% share of their business to Woolworths, and whilst this does not constitute a total buy out, for the sake of the argument, the case still stands. Woolworths saw the buy-in as an opportunity to buy up a supply line and ensure good access to the brand, as craft beer sales grew. With power to wield over the brewer, it soon become apparent that Gage Roads would become the equivalent of a exclusive brand beer for Woolies and distribution was limited to Woolworths owned stores including Woolworths Liqour, (now defunct), BWS and Dan Murphy’s. For the next few years, things seemed to remain unchanged and in this article written in 2012 things sounded good (at least for investors) with increases in sales for Gage Roads although in the warning to investors about risks, it says “The down side is that Woolworths holds the upper hand in the relationship and can force Gage Roads to sell its products cheaply thereby reducing Gage Roads margins and profits”

At this point of time, we would have probably argued that the BEER was still the same and although the company structure might have changed, the new owners hadn’t had any major impact on the actually beer. But then something DID change, with the continued growth and demand for craft beer, came more competitors, but even that growth shouldn’t have changed Gage Roads direction. What did appear to happen though is with all these new brands fighting for space on a Woolworths shelf, Gage Roads brand positioning seemed to move. They were no longer a unique product and with Woolworths facing competition against their old friends at Coles, they could use the exclusive brand as promotional tool and started to discount the brand. Of course this increased pressure on pricing now starts to impact on the brewing process and inevitably corners get cut and the quality of the BEER gets compromised.

In our opinion the final change  came with the official re-branding of the beers, which came with not just a new look label, but a whole new range designed specifically to fit into this market. At was at this point when the BEER finally became the victim in all of this and the once quality craft beer, became a common mega-swill beer just like the multi-national beers.  If you have tried any of these beers, you will almost certainly agree, that they are no longer “craft beers”.

This article written just this week, looks like it signifys the final nail in the coffin for the brand with a further 16% decline in sales in the past 9 months and negative cash flows. Unfortunately whilst  “The company partly blamed a market-wide decline on mainstream, commercial-style beers for the drop in contract sales” we think the truth is much different. It is clear to us, that the part ownership of Woolworths had a significant effect on the BRAND, and the DIRECTION of the company and this ultimately lead to the BEER not being what it once was.

So whilst there will no doubt be lots of discussion and varying views on these sort of takeovers, we think one thing is pretty clear. At the end of the day, it is the BEER that matters and if the BEER continues to be of a high standard, most drinkers will continue to support the brewer. When that changes, well it’s game over.

Update 10 September 2016.

The Gage Roads story continues with them looking to by back shares from Woolworths. It just goes to show, you should never sell your soul. Read the story here.

Another update 8 February 2017 – Return to Craft.  Maybe you should never have left?

 

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Institute of Beer

Institute of beerIt’s not a joke, there really is one ! The newly formed Institute of Beer (IOB) is  a new initiative that will focus on formal and informal beer education and consultancy.  Australian craft beer industry heavyweights have joined forces to launch the IOB, including managing director Peter Fullbrook who has a background in business education; Neal Cameron who is a master brewer at the Australian Brewery and judges at major beer and cider shows; Dave Phillips who runs Dave’s Brewery Tours and has excellent knowledge of the brewing industry and Ian Kingham who was previously in charge of beer and spirits strategy at Woolworths and is also a prominent beer judge.

The IOB will focus on three main streams which are:

  1. Formal and Informal education
    This will include some basic education for craft beer enthusiasts wanting to learn about beer, to Certified Beer Servers and Certification of knowledge and tasting skills for professionals dedicated to beer through the world recognised Cicerone program
  2. Consultancy
    IOB will offer consultancy on anything from setting up a brewery right through to the sellers and marketers of a brewery.
  3. Events
    The third area is learning about beer through less formal education, which would be things like beer events and beer evenings.

For part of the formal education, IOB has formed an agreement with Cicerone, the most highly-recognised beer training programme in the world, certifying and educating beer professionals in order to elevate the beer experience for consumers.

The training programmes will be adapted slightly to suit the Australian beer landscape so that things like beer style examples will be Australian not American.

For more information on IOB or to inquire about education or consultancy opportunities, call 02 8987 1908 or email info@theinstituteofbeer.com.

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Controversy over the Hottest 100 Beers

On reflection of the controversy around today’s “Hottest 100 Beers” here a few things to consider.

    1. The word “craft” still has no clearly defined meaning so in this case it obviously applies to “all brewers” so despite there being a number of beers from big brewers, it is good to see that it was not dominated by them and the little guys were represented well.
    2. Regarding Dan Murphys involvement, it is not clear what their “sponsorship” involves, but it appears it is linked to the promotion of the event and given that they are probably the largest retailer of “craft” beer nationally, you would expect the brands that they sell to be well represented.
  1. This leads to the topic of distribution. Obviously not all brewers get the same level of distribution, so it going to be hard for some of them to get noticed, BUT if you have a look at Pirate Life’s results, it does show that they can still rate well, even with a limited distribution.
  2. Regarding the voting. Those of you that voted will know that you basically just vote for your top 5 beers and it is basically a popularity vote. What I mean is that there is no rating system for each beer, or voting for best beer in a style, or anything complicated like that. It is just like asking someone “what is your favourite beer?”
  3. Considering all of the above, it is no surprise that beers like S&W Pacific Ale, Feral Hop Hog and Little Creatures Pale Ale all rate well. They are readily available and appeal to a wide range of palettes and rate well on the “happiness factor”.
  4. This of course leads to the most controversial issue of comparing gateway beers like Fifty Lashes to “true craft” beers like Brew Cult’s Milk and 2 Sugars. If we are honest, we would all say, that MA2S is not a gateway beer and none of us would have switched to that straight from the Commercial Beers we drank on tap when we started. We have all traveled a journey from Crap to Craft and along the way have all had our fair share of Fifty Lashes or whatever the equivalent gateway beer was for you. I think what this list shows is the diversity of the great beers that we have now in Australia, when you get the likes of Little Creatures, James Squires and Pirate Life, all ranking in the top 10. Which leads me to my final point.
  5. If there were any thoughts of this being rigged or controlled by the “big guys” consider Pirate Life’s amazing performance. For a small independent brewery, with limited distribution, to get 3 of their beers in the top 15 in their first full year of brewing is an amazing result and one that should prove the doubters wrong. No doubt I have overlooked some aspects, but I think considering everything, it was a pretty good result. Over to you !

Read more about the Hottest 100 Beers here

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Hottest 100 Craft Beers for 2015

The Top 3 in the Hottest 100 Craft Beers for 2015

The winners are in for the Hottest 100 Craft Beers for 2015. Love them or hate them, these are the results. Read about the controversy here.

1. Stone and Wood Brewing Co – Pacific Ale Pale Ale (Australian-style)

2. Feral Brewing Company – Hop Hog IPA (American-style)

3. Pirate Life Brewing – IIPA Double IPA (American-style) – NEW

4. Pirate Life Brewing – Pale Ale Pale Ale (American-style) – NEW

5. Little Creatures – Pale Ale Pale Ale (American-style)

6. James Squire – 150 Lashes Pale Ale (Australian-style)

7. 4 Pines Brewing Company – Pale Ale Pale Ale (American-style)

8. 4 Pines Brewing Company – Kolsch Kölsch

9. Modus Operandi Brewing Co – Former Tenant IPA (American-style)

10. Feral Brewing Company – Karma Citra Black IPA

11. Pirate Life Brewing – Throwback IPA IPA (Specialty) – NEW

12. James Squire – Hop Thief 7 Pale Ale (American-style)

13. Two Birds Brewing – Taco Beer Specialty Beer

14. BrewCult – Milk and Two Sugars Sweet Stout – NEW

15. Bridge Road Brewers – Beechworth Pale Ale Pale Ale (American-style)

16. Big Shed Brewing – Golden Stout Time Sweet Stout – NEW

17. Feral Brewing Company – War Hog IPA (American-style)

18. Coopers – Pale Ale Pale Ale (Australian-style)

19. Mountain Goat Brewery – Summer Ale Pale Ale (Australian-style)

20. Mountain Goat Brewery – Steam Ale Pale Ale (Australian-style)

21. White Rabbit Brewery – Dark Ale Dark Mild

22. Boatrocker Brewing Co – Ramjet 2014/15 (Whisky Aged) Russian Imperial Stout – NEW

23. Lord Nelson Brewery Hotel – Three Sheets Pale Ale (Australian-style)

24. Nail Brewing – Red Amber Ale (American-style)

25. Prancing Pony Brewery – India Red Ale IPA (American-style)

26. Riverside Brewing Company – 777 Double IPA (American-style)

27. Fortitude Brewing Company – Noisy Minor Admiral Ackbar Amber Ale (American-style)

28. James Squire – The Chancer Blonde/Golden Ale

29. Stone and Wood Brewing Co – Cloud Catcher Pale Ale (Australian-style)

30. Young Henrys Brewing Company – Newtowner Pale Ale (Australian-style)

31. Fortitude Brewing Company – Noisy Minor ANZUS IPA (American-style)

32. Matilda Bay Brewing Company – Fat Yak Pale Ale (American-style)

33. Little Creatures – Bright Ale Blonde/Golden Ale

34. Colonial Brewing Company – Small Ale IPA (Specialty)

35. 4 Pines Brewing Company – Indian Summer Pale Ale Pale Ale (Australian-style) – NEW

36. Rocks Brewing Co – Hangman Pale Ale Pale Ale (American-style)

37. Mash Brewing – Copy Cat IPA (American-style)

38. Wolf of the Willows – XPA – Extra Pale Ale Pale Ale (American-style)

39. Vale Brewing – Vale Ale Pale Ale (Australian-style)

40. Little Creatures – Dog Days American Wheat – NEW

41. 4 Pines Brewing Company – Imperial West Coast Red Rye IPA IPA (Specialty) – NEW

42. La Sirène Brewing – Praline Belgian Specialty Ale

43. Little Creatures – Return of the Dread Foreign Extra Stout – NEW

44. Boatrocker Brewing Co – Roger Ramjet 2015 (Bourbon Aged) Russian Imperial Stout – NEW

45. Hawkers Beer – Hawkers IPA IPA (American-style) – NEW

46. Feral Brewing Company – Tusk IPA (American-style)

47. Little Creatures – IPA IPA (American-style)

48. 4 Pines Brewing Company – Australian Pale Ale – The Bastard Children of the British Empire Pale Ale (Australian-style) – NEW

49. Murray’s Craft Brewing Co – Fred IPA (American-style)

50. 2 Brothers Brewery – Growler Brown Ale (American-style)

51. Mountain Goat Brewery – Fancy Pants Amber Ale (American-style)

52. Green Beacon Brewing Co – Windjammer IPA (American-style)

53. Hawkers Beer – Hawkers Pale Ale Pale Ale (American-style) – NEW

54. Feral Brewing Company – Watermelon Warhead Berliner Weisse

55. Big Shed Brewing – Californicator IPA (American-style) – NEW

56. Kosciuszko Brewing Company – Pale Ale Pale Ale (Australian-style)

57. 4 Pines Brewing Company – Citrus IPA IPA (Specialty) – NEW

58. Two Birds Brewing – Golden Ale Blonde/Golden Ale

59. Holgate Brewhouse – Temptress Porter

60. Hawthorn Brewing – Pale Ale Pale Ale (American-style)

61. Odyssey Tavern & Brewery – Calypso Pale Ale (American-style)

62. Newstead Brewing Co – Two to The Valley IPA (American-style) – NEW

63. Big Shed Brewing – F-Yeah Pale Ale (American-style)

64. 2 Brothers Brewery – Kung Foo Pale Lager

65. Stone and Wood Brewing Co – Garden Ale Pale Ale (Australian-style)

66. White Rabbit Brewery – Pale Ale Pale Ale (Belgian)

67. Two Birds Brewing – Sunset Ale Amber Ale (American-style)

68. Six String Brewing Company – Dark Red IPA IPA (Specialty)

69. Gage Roads Brewing Co – Atomic Pale Ale Pale Ale (American-style)

70. Murray’s Craft Brewing Co – Angry Man Pale Ale Pale Ale (American-style)

71. Shenanigans Brewing – Winston Pale Ale (American-style)

72. Akasha Brewing Company – Hopsmith IPA (American-style) – NEW

73. Nail Brewing – Clout Stout 2015 Russian Imperial Stout

74. 2 Brothers Brewery – Grizz Amber Ale (American-style)

75. Exit Brewing – #010 West Coast IPA IPA (American-style) – NEW

76. Colonial Brewing Company – Draught Kölsch

77. Mornington Peninsula Brewery – IPA IPA (American-style)

78. 4 Pines Brewing Company – Extra Special Bitter ESB (Extra Special Bitter)

79. Australian Beer Co – Yenda Pale Ale Pale Ale (Australian-style)

80. Little Creatures – Rogers Amber Ale (American-style)

81. Moon Dog Craft Brewery – Splice of Heaven IPA (Specialty) – NEW

82. Batch Brewing Co – West Coast IPA IPA (American-style)

83. Thirsty Crow – Vanilla Milk Stout Sweet Stout

84. Mountain Goat Brewery – Barrel Breed Barley Wine Barleywine (UK-style) – NEW

85. Bridge Road Brewers – Bling IPA (American-style)

86. Rabbit & Spaghetti Brewing Co. – The Fox Vienna-style Lager – NEW

87. Mismatch Brewing Company – Session Ale Pale Ale (Australian-style)

88. Bentspoke Brewery – Crankshaft IPA (American-style)

89. Mornington Peninsula Brewery – Pale Ale Pale Ale (American-style)

90. Burleigh Brewing Company – 28 Pale Ale Pale Ale (American-style)

91. Newstead Brewing Co – 3 Quarter Time Pale Ale (Australian-style) – NEW

92. White Rabbit Brewery – White Ale Witbier

93. Feral Brewing Company – Sly Fox Pale Ale (American-style)

94. Hargreaves Hill Brewing Company – ESB ESB (Extra Special Bitter)

95. 3 Ravens – 55 Pale Ale (American-style)

96. KAIJU! Beer – Metamorphosis IPA (American-style)

97. Coopers – Coopers Sparkling Ale Pale Ale (Australian-style)

98. Modus Operandi Brewing Co – Zoo Feeder IPA (American-style)

99. KAIJU! Beer – Hopped Out Red Amber Ale (American-style)

100. Bad Shepherd – Hazelnut Brown Brown Ale (UK-style) – NEW

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