Opinion divided on ACCC inaction

Not all small brewers have joined in the outpouring of anger at the ACCC’s finding that tap contracts do not substantially lessen competition.

Contracts or not, it’s up to small brewers to create a market for their beer, commented Black Hops Brewingco-founder Michael McGovern on Facebook.

“It’s not big breweries, it’s not tap contracts. It’s the market and the market does not give a fuck about you and your gripes. If you create something consumers want then retailers will buy it but change also takes time. Be patient. Stay focused. We will get there,” he posted inreply to thisABC news article.

Expanding on these thoughts, McGovern told Brews News:“It is absolutely our job to sell and market our beer better but also accept that a supply contract is more about protecting the brewery and creating convenience for the venue than specifically excluding craft brewers, and in fact many craft brewers have their own exclusive supply contracts with venues.”

“I don’t believe that a repeal of tap contracts is going to have a significant change in purchasing habits of these venues but at the same time there is already a strong organic swing towards more venues stocking craft beer.

“I believe we need to remember the reasons why people choose to buy our beer and focus our attention on those influencers. Quality in product, service and customer experience – that’s what will win. You look at all the successful companies in the world, they didn’t complain about their situation – they played the game to their advantage.”

McGovern’s comments – which have been echoed by a number of small brewers who would not be quoted for this article – contrast with theIndependentBrewers Association’s characterisation of the ACCC’s decision as a “body blow for the Australian independent brewing industry”.

“For any small business to survive it needs protection from the market practices of dominant players. We had hoped that Australian consumer law, as interpreted by the ACCC, would be able to provide that protection. It seems we were wrong,” said IndependentBrewers Association (IBA) chair Ben Kooyman.

“The ACCC’s finding that tap contracts do not substantially lessen competition certainly does not match the realities faced by our members in the marketplace. We find it puzzling that the investigation seems to have focused on the venue’s experience rather than that of small brewers.”

Hawkers growing despite contracts
Hawkers Beerfounder Mazen Hajjar labelled the ACCC as an ‘underfunded toothless tiger’, arguing contracts are the reason that craft beer in Australia does not have the same market penetration as in the US.

In the same week, he was quoted in aSydney Morning Herald article, saying that his biggest challenge was managing his brewery’s rapid growth.

“It is a nose bleed to manage such growth,” he said in the article, revealing his two-and-a-half year old brewery was going to triple its $8 million annual revenue over the next two to three years.

When questioned whether this spectacular growth undermined the case against contracts, Hajjar said Hawkers is growing despite the “anti-competitive” behaviour.

“My [growth] struggles are mine, they’re not doing me a favour by slowing down my growth,” he said.

“They are not giving us an equal footing in the market.We’re doing ok despite them, not because of them,” he said.

Echoing Hajjar’s comments, the IBA said the rapid growth of the independent sector is only occurring off a very small base.

“It is growth that can be correlated with the growth of specialist venues and access into a minority of mainstream venues. If we want to continue that growth we need to have a level playing field regarding access to the majority of venues,”executive officer Chris McNamara said.

He acknowledged that consumer tastes were changing in response to independent competition, but described it as ‘restricted’ competition.

“These very gradual changes are as a result of competition but it is a restricted, artificial competition given the advantages of the dominant market players,” McNamara said.

“Independent brewers just want a fair go.”

While the two large brewers have remained aloof of the discussion, Lion issued a statement saying anyone who enters a pub these days can see there there is “plenty of choice in tap beer”.

“Smaller brewers with good beers are able to both achieve distribution and attractive growth,” a Lion spokesman said.

“We will continue to invest in growing the beer category, and in encouragingappreciation of great beersregardless of the size of the company that makes them.”


Back to Historical