ACCC INVOLVEMENT IN BIG BEER BATTLES CONTINUES

In Contracts by Clyde Mooney

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Following a positive ruling on Australia’s part in the beer global mega-merger, the Australian Competition & Consumer Commission (ACCC) is still unhappy about tap contracts and craft brewers.

Last month the ACCC gave the green light to a $145 billion merger between Anheuser-Busch InBev and SABMiller, despite significant effects on competition in Australia.

The takeover of SABMiller by AB InBev will result in Lion relinquishing distribution rights to Corona, as it is produced by Grupo Modelo, which is owned by AB InBev. SABMiller owns Carlton & United Breweries (CUB), which it acquired in 2011 for $12.3 billion.

Corona represents just over five per cent of the beer market in Australia, and its shift from Lion to CUB will see the latter return to being the country’s largest brewer, with around 45 per cent market share, compared with Lion’s 40 per cent after the loss of Corona.

But separately, the ACCC has continued its investigation into the tight control CUB and Lion exert over taps in venues, where they sell in the vicinity of 30 per cent of their combined 85 per cent dominance of the market.

Low-volume ‘craft’ breweries now number approximately 350 around the country, and compete for a share of a sector that now represents around five per cent of Australia’s $14 billion annual beer market. Craft beer has continued double-digit growth for years, but from a small base.

This could in part be due to the alleged exclusionary tactics of the large breweries, which maintain a focus on high-volume brands such as VB, Carlton, Tooheys and XXXX, while simultaneously investing in the growth potential of artisanal brands and liquids via acquisitions.

But Australian consumers, while gradually extending their appreciation for brews with bigger flavour profiles, have consistently voted with their wallets in both licensed venues and retail outlets.

The all-or-nothing credo of the craft beer devotee is giving way to a more rounded consumer that likes to experiment, often alternating with or returning to a long-time favourite mainstream beer.

The unpretentious Beer DeLuxe chain, recently acquired from Armada Hospitality by the highly motivated Dixon Hospitality, believes pubs need to decide what is right for them and their patronage in terms of what their taps pour.

“We love the further input of craft beer players and smaller independents to the market place and support this heavily across our venues, but we certainly understand the importance of contracts, rebates and incentives the bigger players provide to operators,” Armada director of operations, Craig Shearer, told PubTIC.

“I think a good balance of both is required to keep the hospitality industry healthy, and it is up to operators to choose which model (or a hybrid version) works for them.

“At the end of the day it is ultimately the consumers that will dictate what they want to drink, and as demand for wider ranging of products increases the ability to commit to tap contracts will diminish.”

The ACCC has not yet announced when it will conclude its investigation into tap contract arrangements, but continues discussions with major breweries.

The Australian Financial Review reports the Craft Beer Industry Association (CBIA) is looking to the ACCC to clarify through its results the issue of fair access to taps in pubs and venues.

Do you have a view on the tap contract debate?

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