Craft beer boom – how did we get here?

The craft beer industry is growing at the same time that the mass-produced beer market is shrinking. How and why did this happen? Consider this short history of beer in Australia…

Consider that there were over 100 breweries in Victoria alone at the beginning of the 20th Century, and that by 1990 the number of breweries had dwindled to a dozen or so – across the whole of Australia!

The reduction in the number of breweries from the early 20th century can be partly put down to technological innovations. Refrigeration meant beer kept better and trucks enabled beer to be transported over longer distances. These innovations created a number of advantages for brewers and beer drinkers, enabling more reliable beer storage and for good beers to travel further.

However, such a drastic consolidation of breweries however ultimately led to less choice and less focus on product quality in beer.  It was after World War 2 when the pressures of increasing globalisation and an uptick in mergers and consolidations between companies gave rise to multinational corporations, that the vast majority of beer sales came into the hands of only a few. These growth-hungry corporations used their scale, superior technological capabilities and hostile tactics to takeover and dismantle almost all of their competitors. Hence, only a few breweries were left standing.

Consumer choice was limited by beer tap contracts that tied local pubs to certain beers, smaller brewers were bought up and then closed, and suddenly we were stuck with a limited choice range and a beers of such questionable quality as VB reigned supreme.

Where are we now

While XXXX and VB are still the biggest selling beers in the country, the flagship beers of the two multi-national corporations Lion and Fosters who control over 90% of the market in Australia, things are changing.

Consumers are starting to look for a broader range of choices of beer. Now after an 80 year period of decline, the number of breweries has been expanding and of recent years new breweries seem to be popping up all the time.

Although craft beer’s market share might still be small, its growth is impressive. On the subjective level, it has been seen with the increasing success of events like GABS and the Microbreweries Showcase, by the appearance of craft beer bars and more craft beer focused bottle shops.

This blog is all about this movement back towards better beers and greater choice, truly “The Beers Are A Changin’”.

The Big Boys of course want a piece of the action. At the same time that they try to revive their flagging flagship beers through nostalgic appeals, heavy discounting and by buying islands, they are also looking at ways to enter the craft beer market.

The retailers themselves have entered the fray, brewing private label faux-craft beers that try to appeal to the consumers taste for something new, like Coles’ new Steamrail range. But they still seem to be missing the point because they’re not producing better tasting or more interesting products, and they’re not placing importance on the locality of the brewery.

Of the two major beer corporations, Lion appears to have been the quicker to recognise the potential of craft beer, expanding their range and leveraging craft beer through  promotion of the gateway beers of James Squire, and by assuming full control of Little Creatures.

A Lion spokesman, in an interesting recent article dissecting a beer industry at the crossroads, summed up the value of craft beer for their business:

James Squire is the very clear market leader in craft and Little Creatures is a great brand with a lot of room for further growth. Growth in craft is great for the entire category; it generates new interest in beer by highlighting its versatility and championing its flavour.

I agree that growth in craft beer is great for beer as a whole. For years, the corporations downplayed flavour in beer, giving rise to the craft beer movement, now with their profits dwindling they are trying to capitalise on craft beer’s growth through cynical attempts to capture the market with faux craft beers.

Beer drinkers have led the revival of microbreweries by seeking out and supporting better beer and so too will they ultimately decide whether the momentum stays with the microbreweries or whether the corporations can regain their dominance through faux craft beers.

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