An ambitious 15% beer market share target and challenging policy directions are highlights of the Independent Brewers Association’s planned 10-year roadmap.
The FutureBrew2031 report was released to IBA members last night, following funding from the NSW Government in 2021 which enabled the organization to commission accountancy firm KPMG to undertake the major research and development project planning.
IBA Chief Executive Kylie Lethbridge explained that the roadmap will help set the parameters for success for breweries and the industry body, including a focus on independent seal and provenance, and will detail the steps needed to achieve its “key vision” of growing market share. for independent brewers.
But the IBA has also set itself major political orientations. Tap contracts have been an issue for successive IBA Boards, and the report revives them as an area of policy interest for the IBA.
In addition, the nationalization of container deposit systems, which have placed a regulatory burden on breweries, especially those that export interstate, has become a priority.
Simplifying liquor licensing regulations and reducing complexity and inflexibility in local and regional planning frameworks are also on the agenda.
The report, which surveyed consumers, brewers and industry experts, also focused on the need for brewers to raise awareness of independent beer through the Independent Seal, launched in 2018, as well as to s to expand into new market segments and to develop innovative new products and distribution. methods to achieve its target of 15% market share.
“It was a lot of work and now the hardest part is doing it, launching it and embracing it,” Lethbridge said. Breweries News.
“We really want engagement through this process and the job is not done once the plan is approved by our members and approved by our board. So it’s hell for leather to get the government to recognize it. It’s an exciting time.
While the consultation period is open primarily to members, the IBA has also considered non-members.
“We have over 400 brewing members and we know there are a good 200 more and everything in this plan will impact them. We hope this plan sets a good example and reassures that the industry association is on a very strategic path – it’s the evolution of where we need to go and the next level of sophistication,” said Lethbridge.
“I hope that those who listen and watch what the IBA has done, may decide to become a member. Although at this stage it is focused on member consultation, I am glad to hear anyone will be affected by what this plan says.
The brewing industry in 2022
Since 2012, the report shows the industry has grown by 26% and has over 600 independent breweries across the country (with 567 physical breweries according to the Konvoy Brewery database) employing around 8,672 people and contributing over $304 million. dollars in direct salaries. in 2021.
The majority of the industry is based in rural and regional areas – the report estimates that two-thirds of breweries are in these areas.
The report also pointed out that, although Australian beer consumption is at its lowest level in 65 years, the growth of the independent brewing industry was driven by growing consumer demand for high quality products with provenance and “a story that consumers can buy”.
Independent beer production volumes have grown 67.8% since 2012, growing market share from 1.9% in 2012 to over 7.3% in 2020.
In terms of consumer trends, the report found that customer recognition of craftsmanship stems from word-of-mouth, experimentation through sampling, tastings and events.
Interestingly, given the growing impact of private label beer brands in bottle stores, major retailers such as BWS and Dan Murphy’s are still where consumers are most likely to buy craft beer and General public.
Fifty-four percent of consumers surveyed buy craft beer from large bottle stores, but they are increasingly looking for alternative distribution channels to buy beer, including online, according to the report.
The future of the industry
The FutureBrew report highlighted five key pillars that will support the growth of the brewing industry:
- Customers and Channels – strengthen the independent beer brand, develop export capacity and meet consumer trends
- Supply chain and manufacturing – digitize supply chains and integrate quality management systems, guaranteeing the future supply of raw materials
- Workforce and skills development – develop and retain talent with a focus on competitive salaries and “first class” working conditions
- Regulations and legislation – reduce regulatory burdens
- The breweries of the future – innovate, structure for growth and integrate ESG considerations in breweries
Each pillar has key performance indicators and targets, such as growing independent beer export revenue to $3.6 million per year, establishing beer trails in every major city and regional center and a reduction in product recalls.
Some goals are less tangible, such as providing career development opportunities within breweries and having a strong pipeline of leaders supporting future growth, with the industry recognized as an employer of choice and attracting talent at scale. world.
Other goals are ambitious, such as suggesting that the industry unites behind a common set of political priorities and a sophisticated advocacy platform, and simplifying planning regulations – which was also highlighted at of the state in the Brewing States report earlier this year.
The FutureBrew report also highlighted macro-trends on a global scale that can provide opportunities and challenges for independent breweries.
Among them are increased demand for premium products that customers believe align with their personal values, and an awareness of the unstable nature of brand loyalty, with social media influencing demand for new and innovative trends. and leading to changes in consumer preferences.
Health-conscious consumers and those concerned about environmental, social and governance (ESG) outcomes will be on the rise, and the other major driver is the shift to e-commerce as the preferred channel for customers.
Role of the IBA
The FutureBrew report also explored the role of the IBA over the next 10 years, from marketing independence to legislative priorities.
Within these policy directions, the IBA will direct its efforts in part towards developing greater recognition of its Indie Seal – implemented by 83% of breweries surveyed in the report.
According to the report, consumers currently misunderstand ownership and the IBA, which found that independence alone “does not appear to be sufficient to drive increased purchases and consumption across the board.”
This will force the IBA to define independence and what it means to consumers – that it is local, Australian and independent breweries defined by “the use of high quality ingredients and production standards , authenticity and diversity of flavors”.
The collaboration was also highlighted as a way to achieve the 15% market share target, and it highlighted the South West Brewers Alliance in WA as an example of a local cluster with simple local goals.
“We cannot compete with the big players in terms of resources and scale. However, by working together, we can tap into a strong network of global and local knowledge,” said one brewer.
Accordingly, the IBA recommended supporting the development of regional clusters and expanding its own online platform to enable knowledge sharing.
The evolution of regulations was high on the agenda with the start of major projects for the IBA.
According to the report, 96% of brewers surveyed believe that tap contracts play a significant role in reducing the competitiveness of independent beer, and therefore one of the IBA’s objectives will be to improve access to faucet contracts – by reducing or eliminating them. in bars, which she says would give independent brands a more level playing field.
“The IBA’s advocacy story and our submission on the sale of Stone & Wood last year has rekindled the real concern about this and that this will be the biggest hurdle to our industry.
“Conversations with the ACCC were good and solid enough that we understood there was always an opportunity to go back and get back on it, but it takes a legal team and a lot of time, it’s a situation of David and Goliath.
“We haven’t put a huge amount of resources into it before, but it’s what the brewers tell us is important and we’re going to work collectively and find a smart way to get that conversation going again.”
The report also suggested that the IBA’s policy priorities include nationalizing the container deposit system to reduce regulatory burdens, simplifying liquor licensing regulations and reducing restrictions and reducing complexity and lack of flexibility in local planning and development regimes.
“I can only imagine what the beer market will look like in 10 years,” Lethbridge said in its roadmap introduction.
“In 2031, I see independent brewers holding 15% of the beer market in Australia. There’s a local bar or brewery in every town, and independent brewers and beers are household names.
“Their stories are well known, embraced and celebrated by our country’s beer drinkers…The industry will be seen as one that minimizes our impact on the environment, leads with a social conscience and independent brewers will be a valuable thread in the local fabric. communities”.
IBA members have received the report and are invited to submit their comments here with a deadline of May 13.