Indie beer disadvantaged by targeting ‘purists’ say analysts

Major brewers are growing ‘contemporary beer’ products and targeting an audience which is disenfranchised by independent craft beer, according to analysts.

IWSR’s latest analysis published earlier this month noted the niche audience and high price of independent craft beer whilst praising the growth of mainstream brewers in the contemporary category.

The analytics firm defines the contemporary category as competitively-priced and adaptive to consumer trends such as lower ABV beers, and highlighted the introduction of Furphy Crisp Lager as evidence of this trend after brewer Lion identified a counter-movement to more sessionable styles.

But Andre Sammartino, Associate Professor in strategy management and marketing at the University of Melbourne, has suggested that this is not a new pattern of behaviour as mainstream brewers look to combat the growth of craft while at the same time cannibalising their own brands, and also discounts the successful moves by independent brewers into the same space.

Craft’s niche audience

In the past decade, global craft beer sales have trebled, according to IWSR data, and the craft sector is “vibrant” in Australia, replicating the sector’s success in other countries.

But the analytics firm argued that the positioning of many craft beers to target “purists” and “hipsters” gave the independent brewers “less traction with a sizeable part of the Australian market”.

It said that a vacuum had opened for a product to appeal to consumers tiring of traditional beer brand offerings but “who felt disenfranchised by the craft movement”.

As a result, Australia’s mainstream brewers Lion and CUB had effectively created a category of their own to take advantage of this gap, which the IWSR called ‘contemporary beer’ – covering sessionable, mid-strength beers like Great Northern, Furphy, Iron Jack and Frothy.

However Professor Sammartino said that this perspective does not take into consideration the major shifts in the independent beer sector to more sessionable drinking styles.

“The claim that consumers are priced out of craft is true of a sizeable chunk of the SKUs in the market, but is not true of some of the efforts from bigger independents like Moon Dog (Beer Can), Gage Roads, Hawkers (Rover), Brick Lane, or even Stone & Wood.

“Many of these are at the sessionable end of the spectrum – understandably given excise – and thus a comparable story could be told as that for Iron Jack [and the rest].”

So while independent brewers may not necessarily be focusing on the budget end which has predominantly been the province of mainstream brewers, they too are converging on this middle ground.

‘Contemporary beer’

The IWSR analysis found that longstanding brands in the mainstream segment are on the retreat as the “craft revolution” gains momentum.

It reiterated the well-traversed strategies of mainstream brewers as they react to independent craft breweries: buying them, building their own or collaborating with them, which has led to the major brewers siphoning up the likes of Balter, Green Beacon, Mountain Goat, and the list goes on.

“It is a strategy that has been well executed, and the major global players are now discreetly pulling the strings of some of the most popular and well-known craft propositions around the world,” the IWSR said.

It explained that brands like Great Northern, Iron Jack, Furphy and Frothy evidenced a fourth option which was Australia-specific – the development of a ‘contemporary beer’ category.

“Contemporary beer brands are modern beers, launched by the major brewers, that are sculpted and massaged to incorporate the latest contemporary consumer trends,” the IWSR said.

One of these is a lower abv, and statistics from the Australian government found that amongst the strength categories, mid-strength showed an annual compound growth rate of 4.1 per cent between 2012 and 2018, whilst low and full strength beers declined by 2.9 per cent and 0.4 per cent respectively.

“Importantly, they are priced competitively when compared to the mass-market beer brands, and well below the super-premium craft beers on offer. This gives them a widespread appeal – a fact borne out by their strong level of sales,” the IWSR said.

Conversely, IWSR also said that premiumisation trends would continue even following COVID-19’s impact on consumer spending.

“Consumers these days are paying more attention to what goes into their product, where and how it is made and this generally translates well towards premiumisation,” said an IWSR spokesperson to Brews News’ requests for additional comment.

“The growth of craft beer is probably the clearest manifestation but premium mainstream beer brands have also done well. Covid-19 will have an impact on some consumers’ ability to spend, particularly those who have lost jobs or seen pay cuts but Australians have high disposable income and most consumer should not be too badly affected, hence premiumisation is expected to continue.”

Professor Sammartino meanwhile was cautious about the repackaging of the ‘contemporary beer’ category.

“To some extent the author is just dressing up something that has gone on for a pretty long time – have we forgotten Carlton Cold or Carlton Ice?

“I’m not sure I buy that Australia is somehow unique on this front. Macro beer makes these sort of brand extensions across the globe.

“Perhaps the odd thing is the apparent lack of faith in their own brands which drives CUB and Lion to completely (or incompletely) disguise who is behind Iron Jack, Furphy, Frothy or Pigeon.

“In many ways it’s closer in spirit to Coors’ efforts with Blue Moon and Shock Top, or the ‘crafty’ brands of Woolworths, Coles, Aldi and Coca Cola Amatil.”

Tommy Keeling, IWSR’s research director for Asia Pacific said that this sector filled a gap which craft beer could not.

“The speed with which these new contemporary beers have established themselves has demonstrated that although many beer drinkers are looking for alternatives to the big-name brands that have historically dominated the marketplace, this demand is not always serviced by craft products,” he said.

“The main players can respond to the rise of craft not only by joining them, but by possibly also launching new products that respond to the latest consumer needs and that can be scaled up quickly.”

Professor Sammartino however said that this perspective had its flaws.

“What is ironic is that this article makes no effort to point out the most obvious advantage these ‘product innovations’ have from CUB and Lion – namely their huge distribution clout.

“Does anyone think these products would be ‘successful’ without their ability to get them on shelf? I would also suggest that much of this is still about cannibalisation. Great Northern eats VB, XXXX and Tooheys New. Furphy eats Fat Yak [and so on].”

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