Australia: Craft beer makers increasingly competing for shelf space
For a 40-something mortgage owner, fronting a craft beer section is like turning up at a large candy store with pocket money as a kid, the ABC Radio Adelaide reported on July 15.
There's an overwhelming selection to choose from, flavours seem to be growing more and more outlandish, and I can't afford what I want.
Welcome to Australia's craft beer industry of 2021, a high-price-point market saturated with new players, a bucket load of hops and, in recent times, a convergence of candy and beer with offerings like orange chocolate and sour berry ales.
Independent Brewers Association (IBA) chairperson Peter Philip said the Australian market was becoming "very competitive" having exploded over the past decade to more than 600 independent brewers.
"There's not the capacity of demand for another 100 beer brands, and it's very difficult to get shelf space," he said.
"I'm not saying there isn't a place for good products, but it's getting pretty tough to stand out.
"How many pale ales are out there?"
Pundits believe the number of brewers and perhaps the percentage of attention-grabbing flavours is set to increase further after the federal government this year increased its excise rebate for brewers and distillers.
From July 1, they are able to claim a 100 per cent rebate of the excise up to a cap of A$350,000, after previously only being able to claim 60 per cent up to a cap of A$100,000.
But rather than increase competition for shelf space at the bottle shop, the IBA believes it will pave the way for a new era in beer tourism.
"The majority of young people looking to start a brewery now are looking at the brew-pub model, because how many disused or closed old pubs are there in towns across Australia?" Mr Philip said.
He said pubs in small towns could be used by independents to brew their beer and serve it over the counter to tourists who arrive specifically to try it.
"Then you get three towns around it doing the same, creating a little ale trail," Mr Philip said.
"Just look at SA's Barossa, Hahndorf, places like Prancing Pony, they're drawing a significant amount of people for beer tours.
"It used to be wine tourism that was a thing. Now it's beer tourism."
The plethora of brewers could be considered a return to form for Australia, which in 1984 had just 19 breweries after peaking with more than 200 late in the 19th century.
According to a 1999 paper by Southern Cross University historian Brett Stubbs about brewery decline in NSW, which along with Victoria has always held the lion's share of breweries in Australia, that drop could be linked to three main factors.
One factor was brewers "tying" publicans to their products in an effort to withstand the temperance movement and increasingly restrictive licensing laws.
It was also down to emerging technology delivering larger brew volumes with increased economies of scale, and taxes such as colonial and later federal excise.
Dr Stubbs, now an independent scholar, has been closely monitoring changes in the brewing industry over recent decades.
He said the number of breweries in the country had been on the rise again over that time period and had increased "spectacularly in recent years".
"It can safely be said that the total number of breweries in operation in Australia exceeded 300 for the first time ever in 2016," Mr Stubbs said.
The IBA said that up until now, about 0.42 cents in every dollar of revenue for independent brewers has been lost to some form of federal tax, which is among the highest of beer taxes in the world and increases every six months with indexation.
Beer excise has been reflected in prices that have crept higher and higher over the past 20 years, with only the larger brewers able to benefit from economies of scale that help keep prices palatable.
Mr Philip said the tax rebate was unlikely to lead to any reduction in craft beer prices but it would level the playing field for independent brewers, which employed about half of the beer industry's 15,000 employees despite only supplying about 8 per cent of its product.
"If it's a premium product, it's handcrafted and it costs more," he said.
"But that extra A$250,000 [in tax relief] is the difference between being able to hire an extra two people, hire a brewer, and heaven forbid, the owner might actually be able to pay themselves, which is pretty unusual for a small brew pub."
More than 70 brewers from across the country will showcase their wares at the Beer and BBQ Festival in Adelaide next weekend.
South Australia has the strongest contingent, due to locality, but a strong Victoria and New South Wales contingent is also listed COVID-19 restrictions pending.
Among them will be Adelaide's Six Twelve Brewing, which runs its own licensed venue in Adelaide's north east after opening in December 2020.
Head brewer Brad Reid said the rebate increase meant it could purchase more equipment to meet growing demand.
"It also means that before too long we'll actually be able to start employing people, get jobs into our local community, and take away some of the stress of two people running a whole business," he said.
He said their costs were still too high for the rebate to make an immediate difference on beer prices, but believed they could come down in the long run.
Business expansion is precisely the outcome federal Treasurer Josh Frydenberg was seeking with the tax relief.
"There are around 600 brewers and 400 distillers across Australia, with around two thirds operating in rural and regional areas," he said in May.
"The announced changes will allow these brewers and distillers to keep more of what they earn, helping them to invest, grow and support around 15,000 Australians that are currently employed in the sector."
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