IBISWorld beer research: Is the tail wagging the dog?

New analysis by IBISWorld suggesting that craft beer is the key driver of an overall increase in beer consumption is highly questionable.

The global research firm last week released its interpretation of the ABS data released on September 1, which showed Australians’ apparent alcohol consumption rose for the first time in nine years in 2015-16.

In an attention-grabbing media release, IBISWorld attributed that rise to craft beer, however the underlying evidence would not seem to back up that claim.

According to the ABS, on a per capita basis there were 9.7 litres of pure alcohol available for consumption per person in 2015-16, slightly more than the amount in 2014-15 (9.5 litres).

However, the 2015-16 figure was still less than the amount in 2013-14 (9.8 litres), suggesting the increase could just be a tiny blip in the continuing downward consumption trend, rather than the beginning of a sustained reversal.

Apparent Consumption of Pure Alcohol, per capita(a) – Year ended 30 June 2011 to 2016

IBISWorld researchers claimed beer was the driving force behind the rise in per capita consumption recorded by the ABS.

The ABS data bears this out: The volume of beer available for consumption increased by 4.9 per cent between 2014-15 and 2015-16, from 1,660.5 million litres to 1,742.4 million litres.

But IBISWorld further hypothesised that this growth could be attributed “to the rising popularity of craft beer”.

The basis for this was its own research findings, that the Australian craft beer sector will have grown at an annualised 9.7 per cent in value terms – not volume as measured by the ABS – over the five years through 2017-18.

“Craft beer’s popularity has been driven by consumers seeking variety and quality,”said IBISWorld senior industry analyst James Thomson.

“An increasing number of small-scale craft breweries are opening to take advantage of changing consumer tastes, contributing to the expanding range of beers available in liquor retailers.”

Broad definition
Craft beer as defined by IBISWorld includes multinational-owned brands such as James Squire, Mountain Goat and Matilda Bay.

However, a sector that even then accounts for only about ten per cent of total beer market volume would seem unlikely to have been the sole contributor to overall market growth.

By its own admission, IBISWorld’s assessment of the market seems to have been driven more by craft beer’s headline-grabbing potential than any solid evidence.

“From the latest ABS data, full-strength beer had gone up. We’ve taken the fact that this craft beer explosion that is occurring as one of the main driving forces behind this,” IBISWorld analyst Nathan Cloutman told Brews News.

“The latest ABS data did see mid-strength go up slightly, but we felt like with this press release we wanted to talk about how this craft beer scene is expanding, so that went to our focus just because it was an interesting angle to talk about.”

The Herald Sun interprets the IBISWorld research

The strong growth of high volume CUB brands such as Great Northern, Pure Blonde and Carlton Dry has likely been more instrumental in driving growth of total beer.

The ALSA-IRI State of the Industry Report released in February this year saidGreat Northern Super Crisp and Pure Blonde Ultra alone had a 40 per cent share of the entire liquor channel’s off-premise dollar growth in 2016.

“Together with Carlton Dry, these brands underpinned a significant chunk of the double-digit growth observable in Low Carb and Mid- Strength Beer,” said the report.

Overly bullish
The IBISWorld analysis is already beingquoted within craft beer circles as being indicative of the sector’s buoyancy.

This is not necessarily helpful for a fledgling sector that arguably has an over-supply of breweries already, and many more still in planning.

Attributing a meagre increase in consumption to one industry segment is also regrettable in the current regulatory environment surrounding alcohol,as the resultingHerald Sun coveragedemonstrates.

Independent Brewers Australia executive officer Chris McNamara said it is hard to comment on the veracity of the IBISWorld claims without being privy to its methodology.

“We can certainly say that the consumption of independent beer is increasing though as more people look for something different from traditional lagers and look to support small, independent brewers,” he told Brews News.

The IBISWorld media release coincides with the launch this month of its new report,Craft Beer Production in Australia.

“It’s also important to note that, as is pointed out by Mr Cloutman from IBISWorld in the report, consumers of our industry’s products are more concerned about quality than quantity,”McNamara said.

Back to Historical