Ashai takes over craft brewer Mountain Goat

Funny that. Asahi seems to value craft beer in Australia but cannot develop the category at home, where craft beer accounted for less than 1 percent of sales in 2013. Not so in Australia, where craft beer is a growth category. No wonder, on 28 September 2015 the Japanese beer giant Asahi bought its second Australian boutique brewer in as many years, taking over the well-established Melbourne-based craft brewer Mountain Goat, founded in 1997.

The acquisition comes after Asahi bought the Cricketers Arms brand in 2013, which has increased in sales by nearly 400 percent over the past year and is now the fifth largest craft beer brand.

Founded by Cam Hines and David Bonighton, Mountain Goat has been contract partners with Asahi for three years. In their statement the pair said that they are confident that with Asahi on board, they will be able to convert many more people to craft beer than we could do on our own.

No financial details of the transaction were released. From what we at BRAUWELT International have heard, Mountain Goat is believed to represent about 20,000 to 30,000 hl beer annually. Insiders say that the sales price was under AUD 10 million (USD 7.20 million). That’s a far cry from the heady money paid for U.S. craft brewers these days, or what Lion forked out for craft brewer Little Creatures, but probably more prudent.

In a beer market dominated by Kirin-owned Lion and SABMiller-controlled CUB, Asahi is a minor player with a market share smaller than Coopers, whose share is around 4 percent.

According to data firm IBIS, most recent data suggest that craft beer in Australia makes up 3.5 percent of the overall beer manufacturing industry and has been growing at around 10 percent in annual revenues over the past five years to AUD 178.6 million.

Over the next five years IBIS forecasts an annual growth rate of only 6.3 percent, in part due to the competition from the Big Brewers.

Lion is the largest player in the craft segment with brands including Little Creatures, White Rabbit, James Squire, Knappstein, and Kosciuszko Pale Ale. SABMiller’s unit CUB ranks second with brands like Matilda Bay, Redback, Fat Yak, Bohemian Pilsner, Helga, Alpha Pale Ale, and Dogbolter. Coca-Cola Amatil is also active in this field through its joint venture with wine maker Casella which brews and markets Yenda beers.

There are currently over 200 craft breweries, the majority of them based in the states of Victoria (Melbourne) and Western Australia.

To compete against the major brewers, craft brewers have resorted to brewing pale ales, which was once the domain of Adelaide-based Coopers brewery. But rather than taking their hint from Coopers, craft brewers are emulating U.S.-style pales ales, which makes most of their pale ales far darker and more alcoholic than Coopers ales.

Pale ales, says IBIS, account for 59.6 percent of craft beer revenues but craft lagers represent 31 percent (insiders say this may be a bit high). Popularised by Matilda Bay’s Redback, wheat beers are also popular (5.5 percent of craft beer revenues) and stouts (4.2 percent).

IBIS findings suggest that Mountain Goat beers are marketed as medium-price craft beers, which I find hard to verify as Mountain Goat’s various brands range between AUD 16 (USD 11.40) and AUD 20 (USD 14.20) for a six-pack. To me that’s still a lot of money but obviously in the Australian context this qualifies as almost a bargain.