Surprise as 4 Pines scores small business grant

Small brewers have expressed surprise that AB InBev-owned 4 Pines Brewery has qualified for a Federal Government grant designated for small and medium businesses.

The Sydney-based brewery recently received $700,000 towards its total investment of $3,421,727 in an “automated multi-function packaging line with data capture & analytics”. The grant was awarded under the $50 million Manufacturing Modernisation Fund.

4 Pines joined several brewers including Brisbane’s Ballistic Beer Company, which received $79,008 towards an investment of $158,017 for a brewhouse upgrade, and South Australia’s Little Bang Brewing Company, which received $100,000 towards “a manufacturing modernisation and efficiency project” costing $206,682.

The Manufacturing Modernisation Fund was designed to “stimulate business investment in new technologies and processes in the manufacturing sector” and was open to “manufacturing small and medium-sized enterprises (SMEs) with up to 199 employees”.

4 Pines’ head brewer Chris Willcock told Brews News the upgrade was needed to allow for bottles and cans to be filled on the existing Brookvale site.

“The upgrade we’re doing here is to up our packaging capabilities with a new filling line from a GEA company in Slovenia, which does bottles and cans on the same line,” he said.

“We’re not able to geographically expand where we are in Brookvale, but it will allow us to do a broader range of products, at faster speeds and have that product range and flexibility on packaging formats.

“We started in bottles, and cans are increasingly up, so we had to bring in a mobile canning line or ship beer offsite to be canned elsewhere, this will remove those additional handling steps. It will also help us build capabilities in upskilling our staff.

“It will be installed by Australian workers and Foodmach are our commissioning technicians, and there is all the peripheral equipment as well,” Willcock said.

Small breweries missing out?

While the grant is a win for 4 Pines, the Independent Brewers Association has questioned the awarding of the grant, designed for small and medium enterprises, to an entity entirely owned by a large multinational.

“We applaud the Government for encouraging small manufacturing businesses to modernise and some of our members have been successful recipients of this grant,” IBA chair Peter Philip said.

“However, there were also some independent breweries that missed out, in part because businesses like 4 Pines received $700,000 in grants.

“4 Pines is owned by the largest drinks and brewing company in the world, AB InBev with more than USD$52.33 billion in revenue, $9.17 billion in profit, and 17,000 employees worldwide.

“That’s $700,000 going to help fund one multinational-owned brewery compared to $379,008 given to small struggling independent brewers.

“Was it really the intention of this program to give money that will go straight to the bottom line of a foreign-owned multinational that pays little or no company tax in Australia rather than supporting Australian-owned small businesses?” Philip asked.

The fund received more than 1,000 applications with just two hundred projects funded.

What is a small and medium enterprise?

Announcing the $50 million Federal program last September, Minister for Industry, Science and Technology Karen Andrews said the “fund will provide grants to small and medium manufacturing businesses so they can invest in capital equipment and new technologies to modernise and employ more Australians”.

The fund was open to Australian registered entities with up to 199 staff.

Asked what was intended by the fund, the department administering the grant advised that “entities incorporated in Australia” were eligible to apply.

“The program is designed to support Australian incorporated entities and manufacturers modernise, adopt new technologies, become more productive and create more jobs by co-funding capital investments and associated reskilling.”

The department did not address whether it had anticipated that wholly-owned subsidiaries of multinational companies would apply as small or medium entities.

Is 4 Pines an SME?

The grant was awarded to 4 Pines Brewing Company Wholesale Pty Limited, one of several Australian-registered entities associated with the 4 Pines Brewery, purchased by AB InBev purchased 4 Pines in September 2017.

CUB counts 4 Pines amongst its 1,600 staff, however founder Jaron Mitchell told Brews News that the 4 Pines business is separate and currently has approximately 170 staff “on the payroll”.

While 4 Pines meets the criteria as an Australian registered enitity with fewer than 200 staff, the question as to when 4 Pines is regarded as a standalone business and when it is regarded as part of CUB is far from clear, even for the business itself.

A spokesperson for CUB advised only that “4 Pines operates as a stand-alone business unit within the broader CUB group”.

CUB’s approach since purchasing 4 Pines and other craft breweries has been to give them brand autonomy, while at the same time the businesses are entirely controlled by CUB and report as part of the larger entity.

ASIC documents show that the company’s registered office is CUB’s head office in Melbourne and all company directors are members of CUB’s Senior Management team. CUB’s VP Legal and Compliance, Australia and New Zealand, Zoe Solomon, is company secretary and listed as the contact for ASIC enquiries.

Foot in both camps

While regarded as a separate business unit, 4 Pines celebrated the advantages that would come as part of the larger entity during the sale.

When announcing the purchase of 4 Pines in 2017, AB InBev’s then Asia Pacific South Zone President, Jan Craps, said the purchase would give 4 Pines access to all of the company’s resources.

“We will support their ambitious plans for the future, using our expertise and capability to help them get their exceptional beer to more people in Australia and globally,” he said.

In the same release, 4 Pines said “4 Pines will receive [access to] to AB InBev’s global resources will provide a platform to expedite the achievement of 4 Pines’ long term goals of customer & employee experience, environmental & social responsibility and innovation.

“Yes. We will have access to even more ingredients and better brewing toys,” 4 Pines explained.

Brews News understands that 4 Pines largest product, Brookvale Union Ginger Beer, is produced at CUB’s Yatala Brewery.

While now seeing its business as separate from its broader parent company, 4 Pines was once conscious of the advantages that “giant multinationals” had and which have fuelled the Independent Brewer’s Association’s unease at the grant.

In an undated post on its blog predating the 2017 sale, the business discussed the reasons for the cost of its beer.

“There are then a bunch of other reasons that make what we produce more expensive, these are aligned with being a small producer and don’t make us any different from any other small, independently owned, Australian brewer, they are however worth a mention as they give some context around competing in a market against giant, corporate, multinationals,” the post said.

“As a small producer with small batch runs, we don’t benefit from the economy of scale or larger purchasing power that big manufacturers have. We therefore pay more for ingredients, more for bottles, more for labels, more for cartons, more for freight, more for storage, more for practically every aspect of getting barley and hops from farmers all the way through until that beer is in your hand.”

The post went on to add, “Sure it would be great if we could be competitive with the large, internationally owned multi-corporates, unfortunately we wouldn’t be the company we are, with the characters that exist in our midst.”

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