Lion tinkers with the alcohol content of its beers

It’s so blatantly obvious. How to raise your profits? Answer: lower the excise. In late February 2016 and only a few days after announcing a 3 percent decline in volume sales for fiscal 2015, Australia’s major brewer Lion advised reductions in alcohol content for three of its major beers: XXXX Bitter, Tooheys Extra Dry and James Boag’s Premium Light.

XXXX will drop from 4.6 percent to 4.4 percent ABV in March, Tooheys Extra Dry will be subject to a similar reduction in April and the Premium Light will fall to 2.5 percent from 2.7 percent ABV in May.

The company explained its decision by saying: “We have tested our brands extensively to make sure they still deliver the same great flavour and quality they always have.”

What Lion did not say is that it will lower the retail prices of these beers too. After all, by reducing the alcohol content it will benefit from a lower excise load. If it does not pass this saving on to consumers, this means potentially more money in Lion’s coffers. That’s provided consumers will go along with it.

However many will remember that, in the relatively recent past, beer drinkers have resisted reductions in alcohol content. In 2009, CUB (then part of Foster’s) reduced the alcohol content of one of its major labels VB to “improve its profitability”, declaring that the beer tasted exactly the same in comments rather similar to those now made by Lion.

In 2009, drinkers clearly thought otherwise and CUB eventually listened. After SABMiller had taken over CUB in 2011, one of the first strategic revisions it did was to restore VB to its original 4.9 percent ABV.