Brewing up a storm

http://www.theaustralian.news.com.au
Cameron Cooper October 31, 2008

THE popularity of craft beers promises to consign to history the last vestiges of Australia's tribal drinking history.In days past, it was a brave Queenslander or West Australian who drank anything but Fourex or Swan, for example, while drinkers in other states largely stuck with home brands such as Victoria Bitter and Tooheys.

With micro-brewery numbers trebling to more than 150 in the past five years, beer drinkers' palates are becoming far more sophisticated.

One label of craft, or boutique, beers that has a strong following is Little Creatures, a Fremantle brewery in Western Australia whose pale ale received gongs such as Beer of the Year in the BBC's Good Food magazine a few years ago.

Howard Cearns, a co-founder and director of Little Creatures Brewing Co, says beer drinkers are following the lead of other beverage lovers in "trading up''.

"People have looked for better tasting coffee and better tasting wine, and beer is not unlike that,'' he says.

A significant shareholder in Little Creatures is international brewing giant Lion Nathan.

The investment demonstrates the growing clout of smaller brewers. Foster's bought another boutique beer leader, Matilda Bay Brewing Co, in the early 1990s, while Coca-Cola Amatil last year bought the Hunter region's Bluetongue, a popular NSW label.

Cearns admits micro-breweries will never be able to compete with the marketing budgets of the brewing giants, so ``the product is your advantage''. He urges patience, too, noting that the Little Creatures business model is gaining momentum after 10 years' experience in the industry.

"It's not something that happens overnight.''

Nevertheless, business research group IBISWorld is forecasting 10 per cent annual growth in the micro-brewery sector to 2013. In a national beer sector that generates about $8 billion a year in sales, the boutique brands still account for less than 10 per cent of total industry revenue.

Audrey Riddell, an IBISWorld analyst, says the most popular new brews are coming from imported beers and micro-breweries.

"This indicates that there's a strong desire for variety and a willingness to pay for it,'' she says.

While some industry mergers have occurred, Riddell says many micro-brewers are "fiercely independent'' and want to operate separately from the big brewing companies.

She notes that regional areas are popular for micro-breweries because of lower rental rates and an ability to combine brew pubs with local tourism attractions.

The unknown factor is how the present economic turmoil will affect demand for craft beers, which are often more expensive than mainstream counterparts. Riddell suggests immediate demand could slow, although she expects sector growth over the next five years.

"With decreased consumer confidence, we are expecting to see it possibly go back towards larger brewers and those micro-breweries that have gained sufficient scale to compete on a cost basis.''

One pub that has become a hangout for craft beer devotees is the Grand Central Hotel in Brisbane, which serves novel beers such as Yippy IPA, Juniper Pale Ale and Brutal Bitter.

So serious about boutique beer is the hotel that it has launched its own "brand'', the Rubber Stamp, which acts as a tick of approval for a brew. If it has the Rubber Stamp, drinkers know it has passed the test of a panel of staff and independent brewers.

Boutique brews with the Rubber Stamp certification will be distributed through a network of hotels and bottle shops, giving craft brewers greater exposure.

"Straight away there's a channel for them to push their product,'' says Matt Coorey, the hotel's general manager and one of the brains behind Rubber Stamp."

Consumers are becoming more sophisticated and Australians are very much looking for different things and I think beer is just following on from that.''

Fiona Reddaway, a partner of Bright Brewery in Victoria, is confident the fast growth of micro-breweries will continue.

"I feel like the beer industry is where the wine industry was in the early 1980s,'' she says. "Can you remember when the wine choice was just white or red?''

She adds that it is becoming less acceptable for people to drink to excess.

"So it's turned from a quantity to a quality topic.''

Bright Brewery produces a range of brews, including its raspberry lambic (rose-coloured with a creamy pink head), a hellfire amber ale (aromatic and moderately bitter) and a blowhard pale ale (an American-style beer with a citrus aroma).

Reddaway says the key to craft beers is the quality of ingredients.

"You've got to use terrific ingredients with no compromise,'' she says. "You're never going to get fabulous flavour out of ordinary ingredients.''

To facilitate ongoing growth, the sector is lobbying to bring federal excise rules on small breweries into line with small wineries, which effectively get a tax break to help them combat the industry giants.

Cearns believes Australia will follow the US craft beer market, which has been strong for at least three decades."So that gives us confidence.''

Underlining its self-assurance, Little Creatures has just commissioned another brewery for Western Australia and has plans to set up another in the Yarra Valley in Victoria. At all times, the focus will be on maintaining a consistent quality of beer and protecting the brand.

"You don't want to disappoint your drinkers,'' Cearns says. "Brand for us is everything.''