How Coopers is taking on the microbrewers

When Coopers decided they need to look at XPA, the craft beer revolution was already underway. So they had to catch up – fast.

Had you been wandering the aisles of Tim Cooper’s local big-brand bottle shop a few years ago you'd have been treated to an unusual tableau.

Bemused wife at his side, the managing director of the nation’s largest Australian-owned brewery was packing his trolley with every XPA he could find.

Australia’s craft beer revolution was by this time well and truly under way, and national sales and marketing director Cam Pearce, himself with almost two decades under his belt at Coopers, was of the opinion that they needed to have a look at getting into XPA.

First step for Dr Cooper: to find out what Mr Pearce on about.

“When Cam asked us about XPA, I tell the story that I took Barbara to Dan Murphy’s and she said ‘what are we doing here?’

“I said ‘I’m getting everything with XPA on the label and we’re buying it and taking it back to the brewery and then we will taste it.

“I had to admit I didn’t know myself what XPA meant.’’

What they discovered was that XPA, or extra pale ale, meant something different to a lot of people: high alcohol, low alcohol, a full spectrum of colour ranges and a “somewhat confusing’’ spectrum of flavours.

Tim Cooper at the brewery tasting on Tuesday. Picture: Tricia Watkinson

“All credit to Cam, because he and his team recognised that this was a new style of beer, a new segment,’’ Dr Cooper says.

“It seemed like a sub-segment, but nonetheless, very quickly XPA grew to be a bigger product than the Pacific Pale Ale and we’re still amazed that it continues to grow, well I’m amazed.’’

The XPA, released in a striking purple can in mid-2019, is part of a gentle product evolution going on at South Australian-based Coopers.

While every craft brewer and their dog rushed into the beer market over the past decade, the company bided its time, and patiently developed a product development strategy that now aims to deliver a new brew into the market each year.

At the company’s Tuesday morning tasting session this week, where the latest batch of beers about to be shipped into market are tasted before they’re let off the lot, Pearce says it’s about finding sustainable products they can grow alongside the ever popular Pale Ale and Sparkling Ale – the latter of which dates back to the early days of South Australian settlement.

The Hazy IPA – a run of 40,000 cases of the relatively high-alcohol beer – is an exception, but one that delivers what consumers are telling the market they want, while being consistent with the Coopers brand.

In line with the increasingly sophisticated tastes of the Australian beer drinker, the strain of hops used in the XPA and Hazy is part of the marketing push, something Dr Cooper agrees would have been unusual even a decade ago.

The Tuesday tastings take place at the pavilion at the brewery, overlooking the one-hole golf course (with bunker) – down from three holes a few years ago.

A massive new overpass now borders one side of the brewery, with Dr Cooper joking that they convinced the state government to paint the facade “Pale Ale green”.

Dr Cooper and a mix of sales and marketing staff, and the brewing team, taste beers, starting from the ultralight, through lagers and up to ales, ensuring they’re just right to leave the lot. Occasionally someone will ask what the bitterness rating is coming in at, and if a product needs a few more days in the bottle before it’s just right, that’s what it will get.

While Coopers is obviously a beer producer on an industrial scale, it’s still very much a family business, with a hands-on touch driven by Dr Cooper who left a medical career behind and followed his heart into brewing in 1990.

Not surprisingly, it has been a turbulent 12 months for Coopers, with pub closures across the nation hurting the entire sector.

But despite a slow but steady decline in beer sales nationwide for many years now, and literally hundreds of new competitors coming on to the scene in recent times, Coopers, which deftly fended off a takeover bid from the then-Lion Nathan now well over a decade ago, is still enjoying good times.

The company reported in November that there was a 3.9 per cent increase in total beer sales for the 12 months to June 30, underpinned by increased demand for its portfolio of cans.

Total beer sales, excluding non-alcoholic beers, for the financial year rose to 79.8 million litres, up from the 76.8 million litres recorded for the previous year.

While loathe to chase every beer trend that emerges in the crowded craft sector – don’t even mention sour beer in the pavilion – Dr Cooper says they are keen to try new things and want to put out something new and interesting each year.

This has been a strategy for the past four years, and has generated winners such as the XPA and the Session Ale, which picked up pace when it was rebranded as Pacific Pale Ale.

Another surprise package, pun intended, has been the extraordinary success of a move to sell Coopers beer across the range in cans.

Dr Cooper says that cans historically were associated with cheaper “30-pack” stalwarts. But the craft sector, with its eclectic designs, has polished the image of the humble tinnie.

New figures supplied to The Australian show can sales increased 63 per cent for calendar 2020, while packaged sales were up 11 per cent overall. Keg volume was down 37 per cent due to the impact of COVID-19 on the on-premise trade.

While Coopers was founded way back in 1862 and has long been a staple for SA beer drinkers, it was an interstate push starting in about 2002 that provided growth and sustainability for the business.

An increase in geographical reach, pushing sales people out into new markets, delivered strong growth in the decade from then, Dr Cooper said.

“When we started our interstate business we were sitting at under 30 million litres, and grew very quickly over the next 12 years or so to about 70 million litres.’’

The rate of growth has since slowed, with a peak of 83 million litres reached in 2017.

“And then we dipped down, because since about 2014 our keg volume has drifted down and sideways a bit.’’

Brewer Nick Sterenberg, Coopers managing director Tim Cooper, brewer Janie Zimmermann and Coopers general manager Michael Shearer at the tasting. Picture: Tricia Watkinson

Dr Cooper puts this down to competition for taps from the explosion in craft brewers.

“We’ve stabilised, but through the COVID-19 year, the 2020 financial year and subsequently, we’ve had really good growth in the pack volume.

“We benefit from that rising tide of people buying beer and taking it home and we seem to do better than our competitors in that space.

“Even though the pandemic has been a tremendous frustration to everyone, particularly in hospitality, the take-home trade has helped us.’’

And there was the ability to take Coopers home in more formats, with Pale and Sparkling available in cans for the first time in the past couple of years.

Dr Cooper said in the 2018 financial year, 6 per cent of the company’s volume was in cans. By the end of FY20, that figure was about 23 per cent.

“It’s kept on improving so now I think it’s about 25 per cent.’’

The product development process, which began with Pacific Pale Ale, was baked in now, he said.

“We’ve brought out one new product each year.

“The sales and marketing team felt that we were not keeping up. The continuous expansion in the craft brewing sector meant that it was felt that we weren’t keeping up and we needed to be more innovative to demonstrate to our loyal customers that we were able to make products that they were looking for in the craft sector.

“With our expertise, we feel that we’re able to do it.’’

Dr Cooper said there would be another product release this year, which will not be far off.

“The idea is each year now we should have a new product that we can add to the portfolio.

“Some of them won’t be able to last for a long period of time. With Hazy we decided it would be 40,000 cases, a rather special beer, a little bit expensive because of the high alcohol so that was a one-off.

“We’ll keep on the doing the vintage and variants such as Pale Ale in the 440ml can. Many people ask us if we’ll bring out stout in cans, so there’s always something to ponder.

“Some of the craft brewers might bring out several products a year. For us it’s like one or two.’’

Dr Cooper said he believed the craft sector was “saturated”, with competition at the tap and on the shelf leaving little room for new players to enter.

In the US, which leads Australia in the trend, there was a steady expansion up to about 7000 craft brewers, but the rate of growth has fallen off, “and each new entrant is delivering less volume than previously’’.

“The economic fortunes of these businesses will probably highlight to others the challenges involved.’’

And while Coopers had run the ruler across the occasional acquisition target, the big brewers were willing to pay well above the odds, Dr Cooper said.

Tuesday’s tasting over, and the media invite not extending to the secret product development work done on Wednesdays and Thursdays, Dr Cooper heads back to the office, and perhaps on the way home, to Dan Murphy’s for more market research.