Competition for craft brewers is neither fair nor open

For long craft brewers have complained that they cannot get access to taps as publicans prefer to contract them out to the country’s two big brewers – CUB (AB-InBev) and Lion (Kirin). Despite there being almost 400 craft brewers, Lion and CUB control more than 50 percent of the craft segment through brands like Little Creatures, James Squire and White Rabbit (Lion), as well as Matilda Bay Brewing, Wild Yak and Goose Island (CUB). Even Coca-Cola Amatil has moved into this space and so have the retailers.

In October 2017, the Sydney-based craft brewer Redoak took the really desperate decision and offered publicans kegs of its beers for AUD 120 (USD 92) plus tax and delivery. That’s far less than what other craft brewers charge and definitely below cost. The excise on a 4.2 per cent ABV keg of beer alone would total AUD 52 (USD 40) out of the AUD 120 pricing. A keg is 50 litres of beer.

Redoak isn’t a newcomer to the industry. It’s an award-winning brewery that was founded in 2004 by siblings David and Janet Hollyoak.

When approached by local media, Redoak said it is responding to “market forces”. In plain English, you cannot convince publicans to sell your beer unless it’s cheap and they can see dollars piling up. That’s easy to understand.

However, it’s hard to see the logics of Redoak’s tactics. They also said “We are not targeting craft rotational taps of one keg at a time. We are targeting permanent taps and volume.” If that’s supposed to happen with beers that don’t recover their costs, Redoak will soon find itself at the end of a road.

Redoak is not the only one to resort to such hazardous measures.

Therefore, Australia’s competition watchdog must be blind or toothless or both. It’s a mystery how the ACCC came to conclude earlier this year, after a lengthy investigation, that access to taps is open to all and that the beer industry is a fair and competitive market. This flies in the face of what craft brewers experience in the market.