Coopers' star is on the rise

AS every Australian knows, a hard-earned thirst needs a big, cold beer and the best cold beer is ... Vic?

AS every Australian knows, a hard-earned thirst needs a big, cold beer and the best cold beer is ... Vic?

Well, not necessarily any more, and definitely not if you're from South Australia.

For decades Victoria Bitter, or VB, dominated Australian beer sales.

The unsophisticated brew is still Australia's biggest selling beer, with about 16 per cent of the market, but that has been falling steeply, dropping 22 per cent in just four years.

But now, just like West End, Toohey's and XXXX it's not even an Australian beer. Yesterday shareholders of Foster's, which owns VB (and Fosters' Lager, but everyone knows Australians do not drink that) approved a $9.9 billion takeover of the company by SABMiller of South Africa.

It follows the takeover of Lion Nathan, which was already New Zealand-based, by Japanese company Kirin in 2009.

These moves have left Adelaide's Coopers Brewery as Australia's largest Australian-owned brewery, despite Lion's ill-fated attempt to take it over in 2005.

Coopers commands just 3.8 per cent of the national beer market, but along with a growing number of so-called "craft" brewers, which account for another 2 per cent, they are slowly eating away at the dominance of the two major players.

In recent times the beer market has fractured like a stubby dropped on a sandstone patio.

Two decades ago you'd be lucky to find a pub in rural South Australia which stocked anything outside of the generic bulk beers such as West End and VB.

Now industry analysts talk of people drinking a "portfolio" of beers.

Rather than buying a carton and drinking solely VB or West End, consumers are buying six-packs or single beers in an attempt to appeal to their tastes, image and even as a health measure.

This has had a transformative effect on Australia's beer market.

While it is still overwhelmingly dominated by Foster's and Kirin, which together account for 89.4 per cent of all sales, the variety of beer on offer has grown rapidly.

Coopers, which has good market penetration in SA but is still considered a boutique beer interstate, has taken advantage of this, posting 10 per cent annual compound growth for each of the past 15 years.

It has also spawned a relatively new craft beer industry.

Locally, Vale Ale - which is soon to start building a brewery near Willunga - is an example of this, while there is a plethora of microbreweries such as Grumpy's Brewhaus at Verdun and the Lobethal Bierhaus catering for consumers' taste for the exotic.

Craft beer accounts for just 2 per cent of the $5.2 billion Australian beer market at the moment, but that is growing fast.

This is not to say that the large companies have been left flat-footed in the beer revolution.

In 2004, Foster's launched low-carbohydrate beer Pure Blonde to capitalise on Australians' increasing concerns about the effect of carbs on weight gain.

This has been copied by other breweries such as Kirin's Carlton and United Breweries and Coopers, which launched Coopers Clear early last year.

While sales of the core brands owned by the large companies have been falling rapidly, they have been replacing these by developing new brands, or buying up smaller ones, such as Little Creatures (Kirin) and Beez Neez (Foster's).

Compared to other parts of the economy, the beer market is flat.

According to industry analyst IBISWorld, it is expected to grow just 2 per cent per year to 2017, and is actually expected to fall this financial year.

Australian beer consumption fell to a 50-year low of 4.49 litres per person in the year to June 2009, and has fallen by more than 13 per cent in the past decade.

The good news, for consumers, is that this is driving prices down, and spurring innovation in terms of variety.

"With competition increasing, major players in the industry are expected to sacrifice price growth and profitability in a battle to win market share," IBISWorld says in its recent Beer and Malt Manufacturing in Australia report.

"Prices are also expected to come under pressure from the increasing market power of Woolworths and Wesfarmers in the liquor retailing sector, increasing competition from other alcoholic beverages and the rising prevalence of private-label beer.

"The trend towards premiumisation is expected to continue, with foreign brands, craft beers, low-carbohydrate and fruit-infused beers projected to show much stronger growth than bulk beer."

This is all good news for SA's home-town favourite - Coopers Brewery.

After weathering the failed Lion takeover, the company has gone from strength to strength and it yesterday launched a new advertising campaign under the heading "True Brew", talking up its Australian-owned status.

Managing director Tim Cooper said being the largest Australian-owned brewery would offer marketing benefits.

"Our rise to our new-found status, on the eve of our 150th anniversary, was achieved almost by default," Dr Cooper said.

"However, it is a badge of honour we will wear with pride as it represents the reward for 150 years of hard work by the Cooper family.

"The Australian beer market at the moment is tough, with overall consumption having fallen slightly in the past 12 months as a result of economic conditions.

"Certainly being the largest Australian-owned brewer in the country gives us a new marketing tool, but it will be just one factor when consumers decide which brand they purchase."