Fears the craft beer boom is over

July 11, 2019
By Alana House

Could the Australian craft beer sector be reaching saturation point? There are concerns that with almost 650 brewers in operation in the country, it’s becoming difficult to make an impact on shelves.

Trevor O’Hoy, a director of Byron Bay craft brewer Stone & Wood, has told the Australian Financial Review he estimates category growth in craft beer had fallen back to between 10 to 12%, compared with more than 20% a year ago.

As a result, many breweries are relying on food and hospitality sales to pay wages.

“The space has become a lot more competitive than it has been,” O’Hoy said. “It’s become a little more challenging.”

While he predicted the slowing growth means brewing giants may be less inclined to acquire other craft beer brands, CUB remains buoyant about the potential of the market.

The brewer said craft beer brands now have close to 10% volume of the Australian market, but concedes “growth of the craft segment is slowing”.

CUB’s vice-president of corporate affairs, Julian Sheezel, said the company was very happy with how its two most recent acquisitions – 4 Pines and Pirate Life – are performing.

”We’ve exceeded expectations on growth for both 4Pines and Pirate Life,” he said. “So far this year, these breweries combined have been growing above 50% over 2018.”

CUB CEO Peter Filipovic (pictured above with the Pirate Life team) admitted to The Australian that brewers are struggling with a customer base that is less loyal and more keen to experiment across beer brands.

“There is still loyalty but less loyalty than there was 30 or 40 years ago,” he said. “Beer is still very parochial among states and beer lovers still have their favourite brands. The only difference now is that consumers — versus 30 to 40 years ago when they only had one or two beers in their repertoire — now have five to seven.

“They can choose between five to seven brands rather than one or two and craft beer is now one of those seven. Craft has been great for the category — it has brought romance to beer. People are now having more interest in how beer is made and more interest in the stories behind various beer brands, which is fantastic.’’

He noted that CUB’s “contemporary brands” are huge sales drivers. Beers such as Great Northern, Carlton Dry and Pure Blonde have more than doubled in revenue in 10 years.

“CUB is still No 1 brewer in Australia — the only difference is now we don’t rely on VB to have all of our volumes. We have other beers like Great Northern that was introduced in 2010, started in Queensland and then launched nationally to become one of the most popular beers in Australia.”

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