IWSR reports that Australia’s big brewers have found a unique way to protect themselves from the craft revolution, by creating the contemporary beer segment.
Globally, the tactic has been three-fold: buy craft brands, build their own, or collaborate with them.
Australia, however, has shown that there is a fourth way to defend volumes with the beer segment known within the industry as “contemporary beer”.
“Contemporary beer brands are modern beers, launched by the major brewers, that are sculpted and massaged to incorporate the latest contemporary consumer trends,” IWSR explained.
“Importantly, they are priced competitively when compared to the mass-market beer brands, and well below the super-premium craft beers on offer. This gives them a widespread appeal – a fact borne out by their strong level of sales.
IWSR added that while the craft beer segment in Australia is vibrant, the price point and positioning of many craft beers has given them less traction with a sizeable part of the Australian market.
“A vacuum had opened up for a product that would appeal to consumers tiring of the traditional beer brand offerings, but who felt disenfranchised by the craft movement,” it said.
“As a result, the ‘contemporary beer brand’ has successfully been able to occupy this newly vacant middle ground.”
IWSR pointed to the launch of Great Northern nine years ago, which it described as the “flag-bearer of contemporary beers in Australia”. In 2019, Great Northern’s sales overtook the leading mainstream beers in the country.
“Rekindling the distinctive marlin logo from the now extinct Cairns draught brand to add a hint of heritage, Australia’s Great Northern lager is relatively aligned in price with mainstream beers, but costs considerably less than existing craft options,” IWSR said.
Meanwhile, Lion launched Iron Jack in reponse to the popularity of Great Northern. Its contemporary portfolio also includes the popular Furphy, launched six years ago.
And CUB has countered Furphy with Frothy.
Tommy Keeling, IWSR’s research director for Asia-Pacific, said: “The speed with which these new contemporary beers have established themselves has demonstrated that although many beer drinkers are looking for alternatives to the big-name brands that have historically dominated the marketplace, this demand is not always serviced by craft products.
“The main players can respond to the rise of craft not only by joining them, but by possibly also launching new products that respond to the latest consumer needs and that can be scaled up quickly.
“In a post-COVID world, the beer market will see much upheaval, and we are likely to see the rise of contemporary beers elsewhere too, particularly in what is likely to be a price-sensitive era.”
Global beer sales take a hit
COVID-19 hasn’t been kind to beer sales globally.
Diageo reported a 22% drop in sales of its Guinness beer across Ireland over the 12-month period ending in June. Guinness sales were down across Europe, with a 21% decline reported in the Diageo results. AB InBev took a $2.5 billion write-down related to its African operations, and Heineken took a 550 million ($654.3 million) euro write-down.
In Japan, sales of regular beer by all four major brewers fell in the first half from a year earlier. In volume, Kirin Brewery lost 4%, Sapporo Breweries dropped 7%, Suntory Beer tumbled 11%. Asahi Breweries posted a 17% plunge in sales by value.
However, AB InBev reported last week that its global sales volume picked up in June after three months of declines. Sales rebounded slightly last month, with volumes up 0.7% compared with June 2019.