The Australian Competition and Consumer Commission has dismissed claims smaller craft brewers have been locked out of pubs and similar venues by big players such as Carlton United Breweries, but independent brewers are worried the regulator has been “sold a lemon”.
The investigation was carried out over 36 pubs and other venues across Victoria and New South Wales, with the ACCC examining contracts between those pubs and both small and large brewers.
In its determination, the ACCC deduced the contract terms were “unlikely to substantially lessen competition in any of the markets we investigated”, and suggested pubs weren’t offering craft beer due to a lack of consumer demand.
“Although some venues had exclusivity arrangements, most pubs and clubs said they did not feel constrained from allocating taps to smaller brewers and could make taps available for craft beer if necessary,” ACCC deputy chair Michael Schaper said in a statement.
“While some craft brewers may have been refused access to taps by certain venues, our investigation found that the venues were responding to consumer demand for certain beer brands, rather than restrictions imposed by the big brewers.”
Previously, concerns have been raised over the tax rate for independent brewers, with Shadow Minister for Cities and Tourism Anthony Albanese putting forward a motion in parliament for a readjusting of the tax rates, which he claimed put a “significant burden” on smaller brewers.
Speaking to SmartCompany this morning, Albanese noted the ACCC’s report said pubs were responding to consumer demand, which can’t grow without changes on craft beer excise rates.
“One of the impediments to craft beer being more readily available is the tax regime which penalises smaller kegs,” he says.
“If it were changed to be treated the same way as 50-litre kegs you would find outlets far more ready to put on a tap of a new beer from a local craft brewer if it came in a 50-litre keg.”
“The demand for craft brewing would spread quicker if there was equity of treatment tax-wise, and that needs federal government policy.”
The motion put forward to parliament last month received bipartisan support, says Albanese, and brewers are successfully putting together petitions for action across the country.
“Craft brewing is an enormous growth industry that has local support, with local producers employing local people. Consumers are seeing this and they’re voting with their schooner glass,” he says.
Craft brewers say ACCC findings “aren’t 100% accurate”
This local support is being felt by founder of inner-west Sydney brewery Willie The Boatman Pat McInerney, who told SmartCompany his brewery’s beers were stocked in over 120 venues around Sydney’s inner west.
It is for that reason McInerney questions the ACCC’s investigation, saying he thinks the findings “aren’t 100% accurate”.
“I’m not one to question the ACCC by any means, but we’re stocked in more than 120 venues across the inner west, which suggests the demand is there,” he says.
However, speaking to SmartCompany, Schaper said the ACCC didn’t have the potential to “exhaustively” look at the industry, and noted the commission would only find issue if it could determine there was a “substantial lessening of competition”.
“In a legal context, a judge has to see there is a substantial lessening of competition, and we talked to a lot of businesses and examined over 150 contracts, and by and large they haven’t got consumer demand,” Schaper said.
“In some cases, even when there is customer demand, the publicans say people who buy craft beer buy one and then want to try another, and they can’t stock 10 different beers at once.”
“With such a mixed picture, it would be hard to convince a judge the market is tied up.”
McInerney believes there’s little independent brewers can do against million-dollar brewers such as CUB and Lion, with a growing concern in the industry larger players are “stacking the deck” and convincing publicans to push their beers.
The ACCC noted some of the craft brewers that had successfully landed contracts with pubs had done so after a successful marketing plan to create consumer awareness and demand, which Albanese thinks is “just stating the obvious”.
He notes a number of smaller brewers don’t have the capacity to initiate large-scale marketing plans, choosing instead to go by word of mouth.
McInerney agrees, saying most independent brewers lack the “time, money, and expertise” to foster brand awareness at scale, with many choosing to take the word of mouth approach, or what he calls “hand to hand combat”.
“There’s probably a lot of truth in that we can all become better marketers and get better brand awareness, but I just don’t believe there’s no demand for craft beer,” he says.
“People come from nearly all over the state to try beers in the inner west, because they say they can’t get any craft beer in their suburb.”
The ACCC notes it will continue to keep an eye on the craft brewing industry and monitor for anti-competetive behaviour.
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