The fight brewing over the beer giants that have captured the Australian market

The federal government and independent brewers are urging the consumer watchdog to investigate the “enormous market power” of Australia’s two largest beer products amid claims they are squeezing competition and pushing up prices.

Up to 85 per cent of all beer brewed in the country is produced by one of two internationally owned companies: Lion, owned by Kirin, and Carlton United Breweries or CUB, owned by Asahi.

Co-owners of Philter Brewing Mick Neil and Stef Constantoulas at their Marrickville brewery.Credit: Dion Georgopoulos

Assistant Competition Minister Andrew Leigh said a recent report from the parliament’s economics committee showed there was plenty of reason for the Australian Competition and Consumer Commission to investigate the beer industry.

Leigh said competition was good for consumers, workers and innovation – which in this case, meant better-tasting beer, and better versions of new options such as alcohol-free products.

“Australians are paying too much for a schooner. And we need to have a more competitive market,” he said.

“The ACCC is certainly able to investigate whatever industry it wants to turn its mind to. I think beer is one which is deserving of attention.”

Leigh said the wide selection at bottle shops and pubs hid the fact that most of those options were brewed by a couple of major players.

“If you walk into the typical liquor store, you’d think that there was a huge range of different options. But a bit like laundry detergent – you suddenly discover that most of them are owned by just a few outlets,” he said.

Independent Brewers Association chief executive Kylie Lethbridge said it was a case of David and Goliath, and the competition watchdog should investigate.

“The role of the ACCC is to ensure consumers have a choice,” she said.

“We’re feeling that with what’s happening across the sector, it has and is continuing to lessen consumer choice, and will continue if there are no checks and balances in place.”

The ACCC looked at beer tap contracts in 2017 but did not go as far as making enforcement findings.

But the report by the House of Representatives’ economics committee found Lion and CUB were able to exercise “enormous market power” in the local beer industry.

While the committee was unable to calculate the exact profit margins of the two big players, information from Asahi’s purchase of CUB in 2019 suggested CUB had a profit margin of about 40 per cent.

“There appears to be evidence of high margins in the beer brewing sector which may indicate excessive market power. This would contribute to the high cost of beer for consumers,” the report said.

Committee chair and Labor MP Daniel Mulino said the evidence showed there was a duopoly in the brewing industry, even if the big players disagreed with the characterisation.

“It appears that the margins are very high. It appears that they’re far higher than the retail part of the same sector … this is certainly an area that warrants monitoring, at the very least,” he said.

Mick Neil, co-founder of Philter Brewing in Sydney’s inner west, said when his company’s pale ales, IPAs and lagers first hit the market seven years ago, it was easier to secure taps in pubs across trendy inner-city venues in Melbourne, Sydney and Brisbane.

That had changed, particularly in the past five years as Australia’s craft beer industry exploded.

Stef Constantoulas and Mick Neil started Philter seven years ago. Neil said competition has become much tougher in recent years.Credit: Dion Georgopoulos

“The availability of those taps has probably remained pretty consistent with what they were back then. But there’s just so many more people fighting for it,” he said.

Neil said Asahi and Lion had become “more aggressive” in trying to secure taps, offering renewed contracts for sometimes up to 100 per cent of the tap share in a pub in return for things such as cash incentives, forcing hundreds of independents to fight for just a couple of taps in each pub.

Tap real estate was vital for brewers, as it gave customers a chance to try a new brew before committing to buying a six-pack or case at a bottle shop, Neil said.

“The way most of the bigger independent beer brands have the opportunity to build their brand is giving people an easy opportunity to get liquid on lips, we call it,” he said.

An Asahi spokesperson said the number of breweries in Australia had increased by several hundred over the past 15 years, a sign of a healthy industry.

“Australian beer drinkers see evidence of the competitive market each time they set foot in their local bottle shop, with a wide range of independent craft, imported and mainstream beers available,” the spokesperson said.

A Lion spokesperson said the Australian beer industry had never been more competitive and beer drinkers had never had more choice. However, declining beer consumption – which has fallen by about 100 million litres since 2019 – had hit the industry.

“There have also been ongoing cost-of-living pressures reducing discretionary spending, and continuing increases for Lion and all brewers in costs like energy, labour and ingredients, as well as government excise, which is now the third-highest in the world,” the spokesperson said.

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