Article on the struggle of independent craft breweries in Australia

[Beerdo]

https://www.news.com.au/finance/small-business/australias-craft-beer-system-at-brink-of-collapse-as-breweries-lose-battle-to-multimillion-dollar-overseas-giants/news-story/b34346979e966a41b2d3c18f8572c1cd?utm_campaign=EditorialSB&utm_source=News.com.au&utm_medium=Facebook&utm_content=SocialBakers

[Classic Brewing Co]

15 minutes ago, Beerdo said:

https://www.news.com.au/finance/small-business/australias-craft-beer-system-at-brink-of-collapse-as-breweries-lose-battle-to-multimillion-dollar-overseas-giants/news-story/b34346979e966a41b2d3c18f8572c1cd?utm_campaign=EditorialSB&utm_source=News.com.au&utm_medium=Facebook&utm_content=SocialBakers

I saw that today, not good, I think if the government stopped increasing their taxes forcing retail prices up, it would be easier all round.

[NBillett09]

Understandable that they need support to get through these tough times, but who then supports the people to support the breweries? Not the gov that’s for sure. I absolutely believe in supporting the local and independent breweries however it’s just so flipping expensive now. Getting real unaffordable real quick. The same pressures squeezing them from all sides are squeezing the punters also.

[jennyss]

10 hours ago, NBillett09 said:

The same pressures squeezing them from all sides are squeezing the punters also.

I agree @NBillett09, I get the chance to visit a craft brewery once or twice a year and enjoy having a couple of drinks or try a tasting paddle, but I can't afford to buy the beer to take home. There was an interesting point in that article that IPAs etc are a lot more expensive to make than lagers; so maybe a trend back to lagers is driven by cost not customer preference?

[Beerdo]

42 minutes ago, jennyss said:

 There was an interesting point in that article that IPAs etc are a lot more expensive to make than lagers; so maybe a trend back to lagers is driven by cost not customer preference?

Yes they must be. If you go to any liquor store it's always the lagers that they seem to be able to sell at the lowest prices.

[Aussiekraut]

11 hours ago, NBillett09 said:

Understandable that they need support to get through these tough times, but who then supports the people to support the breweries? Not the gov that’s for sure. I absolutely believe in supporting the local and independent breweries however it’s just so flipping expensive now. Getting real unaffordable real quick. The same pressures squeezing them from all sides are squeezing the punters also.

In the end, we have to ask the question, if it is the government's job to prop up unviable businesses? I'm all for lending a helping hand but where does it stop? And if we support one industry, don't we have to support all of them? The electricians, the butchers, the mechanics, etc. In the end, though, we all foot the bill as taxpayers. The government money has to come from somewhere and that is usually us. The uber-rich don't pay much or any tax, so it is the little folks who carry the burden as with everything. 

The breweries themselves have to take a good look at themselves, their business model and how they go. The expansion rate of some breweries is simply not sustainable. We've seen what happened to Ballistic. They had on brewery, which was doing quite well. Then they opened another tap room, another brewery and then two more. Too big too fast and then it all fell apart. Complaining about paying the same excise as the big corporations do isn't helpful. Some taxes are simply "unfair". The prime example is GST. The battler pays the same amount of GST on a loaf of bread as the billionaire does. One is hurt a lot more by missing those 10% in their hip pocket than the other. If I opened a brewery, I should know all of this beforehand. 

There is another problem I see with some breweries. Too much variety! Sounds odd, I know but as with a restaurant, it is better to have fewer dishes than an overabundance you have to cater for. Don't have 15 beers on tap, have seven or eight. It keeps the costs down and improves profit. And what's this DDDDDDDDDWCIPA nonsense about? Outdo your competition by making better beer, not beers with a few more Ds in the name. Compete with your fellow brewers, not with weirdness but with craftsmanship. And as important as being on the shelves in the retail chain is, it also adds costs in the form of transport for example. There are small breweries who don't sell their beer in shops at all. White Lies up here for example just moved its operations to a newly built brewhouse and only sells its beers in the two tap rooms. I spoke to the fella who owns it and he said he's happy the way it is now. Putting it on the shelves in bottle shops just adds stress nobody really needs.

I support small breweries as much as I can but on the other hand, and that is without trying to sound full of myself, I think my own beer doesn't have to hide behind those from commercial breweries and it is a lot cheaper for me to obtain. Not $120/carton but more like $40/2 cartons. 

[Aussiekraut]

59 minutes ago, jennyss said:

I agree @NBillett09, I get the chance to visit a craft brewery once or twice a year and enjoy having a couple of drinks or try a tasting paddle, but I can't afford to buy the beer to take home. There was an interesting point in that article that IPAs etc are a lot more expensive to make than lagers; so maybe a trend back to lagers is driven by cost not customer preference?

IPAs use a lot more hops than a humble lager and often the grain bills are a fair bit more complex. It drives the cost up. Some home brewers use $40+ on hops for their IPAs. A lager is a fairly plain and simple affair, straight to the point and most likely the cheapest to make. It's not cheap and nasty of course but it is no-frills by design.

[Pale Man]

Playing Devils Advocate........is the Craft Brew scene way too flooded, and too many small breweries trying to cash in with lots of useless beers around?

The market is flooded, and its probably a result of these breweries trying to call junk as beers.

It might be the a case of the toughest and best survive. It might be a good thing. To get back to basics with beer, and prove that not every Tom Dick and Sally can successfully run a brewery.

[Pale Man]

11 hours ago, Aussiekraut said:

In the end, we have to ask the question, if it is the government's job to prop up unviable businesses? I'm all for lending a helping hand but where does it stop? And if we support one industry, don't we have to support all of them? The electricians, the butchers, the mechanics, etc. In the end, though, we all foot the bill as taxpayers. The government money has to come from somewhere and that is usually us. The uber-rich don't pay much or any tax, so it is the little folks who carry the burden as with everything. 

The breweries themselves have to take a good look at themselves, their business model and how they go. The expansion rate of some breweries is simply not sustainable. We've seen what happened to Ballistic. They had on brewery, which was doing quite well. Then they opened another tap room, another brewery and then two more. Too big too fast and then it all fell apart. Complaining about paying the same excise as the big corporations do isn't helpful. Some taxes are simply "unfair". The prime example is GST. The battler pays the same amount of GST on a loaf of bread as the billionaire does. One is hurt a lot more by missing those 10% in their hip pocket than the other. If I opened a brewery, I should know all of this beforehand. 

There is another problem I see with some breweries. Too much variety! Sounds odd, I know but as with a restaurant, it is better to have fewer dishes than an overabundance you have to cater for. Don't have 15 beers on tap, have seven or eight. It keeps the costs down and improves profit. And what's this DDDDDDDDDWCIPA nonsense about? Outdo your competition by making better beer, not beers with a few more Ds in the name. Compete with your fellow brewers, not with weirdness but with craftsmanship. And as important as being on the shelves in the retail chain is, it also adds costs in the form of transport for example. There are small breweries who don't sell their beer in shops at all. White Lies up here for example just moved its operations to a newly built brewhouse and only sells its beers in the two tap rooms. I spoke to the fella who owns it and he said he's happy the way it is now. Putting it on the shelves in bottle shops just adds stress nobody really needs.

I support small breweries as much as I can but on the other hand, and that is without trying to sound full of myself, I think my own beer doesn't have to hide behind those from commercial breweries and it is a lot cheaper for me to obtain. Not $120/carton but more like $40/2 cartons. 

I posted after reading this, but sums up my opinion to a T.

[Classic Brewing Co]

23 hours ago, Aussiekraut said:

In the end, we have to ask the question, if it is the government's job to prop up unviable businesses? I'm all for lending a helping hand but where does it stop? And if we support one industry, don't we have to support all of them? The electricians, the butchers, the mechanics, etc. In the end, though, we all foot the bill as taxpayers. The government money has to come from somewhere and that is usually us. The uber-rich don't pay much or any tax, so it is the little folks who carry the burden as with everything. 

The breweries themselves have to take a good look at themselves, their business model and how they go. The expansion rate of some breweries is simply not sustainable. We've seen what happened to Ballistic. They had on brewery, which was doing quite well. Then they opened another tap room, another brewery and then two more. Too big too fast and then it all fell apart. Complaining about paying the same excise as the big corporations do isn't helpful. Some taxes are simply "unfair". The prime example is GST. The battler pays the same amount of GST on a loaf of bread as the billionaire does. One is hurt a lot more by missing those 10% in their hip pocket than the other. If I opened a brewery, I should know all of this beforehand. 

There is another problem I see with some breweries. Too much variety! Sounds odd, I know but as with a restaurant, it is better to have fewer dishes than an overabundance you have to cater for. Don't have 15 beers on tap, have seven or eight. It keeps the costs down and improves profit. And what's this DDDDDDDDDWCIPA nonsense about? Outdo your competition by making better beer, not beers with a few more Ds in the name. Compete with your fellow brewers, not with weirdness but with craftsmanship. And as important as being on the shelves in the retail chain is, it also adds costs in the form of transport for example. There are small breweries who don't sell their beer in shops at all. White Lies up here for example just moved its operations to a newly built brewhouse and only sells its beers in the two tap rooms. I spoke to the fella who owns it and he said he's happy the way it is now. Putting it on the shelves in bottle shops just adds stress nobody really needs.

I support small breweries as much as I can but on the other hand, and that is without trying to sound full of myself, I think my own beer doesn't have to hide behind those from commercial breweries and it is a lot cheaper for me to obtain. Not $120/carton but more like $40/2 cartons. 

I totally agree with you AK, it surprises me when I see an upcoming brewery doing well & before long opening another, you have to build on your business & get established first.

In Adelaide we have a few craft breweries that have been going a long time & there are a couple that have opened a second location: Pirate Life & The Prancing Pony.

They seem to be doing OK, but their new locations are both in the city.

You are right about too many beers, not to mention the crazy prices! It is better to have a core range & release a limited edition now & again; actually, what Coopers seem to do.

It is little wonder most of the pubs in the city & suburbs are empty during most days apart from weekends etc. Their pricing is outrageous as well.

Home brewing is definitely the way to go.

 

[GregT5]

Pirate Life should be doing OK given who owns them. They have the financial backing that a lot of the smaller independent breweries don't have. 

I always look for craft breweries when I am out and about.  There beers are usually better than mainstream beers but the price is getting a bit hard to accept.

One of our local pubs had Pirate Life South Coast Pale Ale on special on tap but it was still a bit cheaper to drink Coopers. 

[ChairmanDrew]

Sounds like running a micro brewery is a pretty tenuous business. Quite a lot have gone down here in NZ, including some big established names.

A lot got hit bad recently when there was a C02 shortage. After the government allowed the shutdown and demolition of the country's only oil refinery, there was only one other local source for C02 production. When the remaining plant producing C02 had an outage prices skyrocketed, breaking the backs of many small breweries.

[NBillett09]

I agree with your comments @Aussiekraut and @Pale Man regarding too many varieties on tap at a time and also a saturation of different craft breweries, I guess my point wasn’t that the Gov should therefore pay the difference, I was more commenting regarding the way they so aggressively hike the tax on alcohol products makes it both a hard industry to be successful (and viable maybe?) in and possibly a hard industry to support. Seems like the majority of the cost of beer products would be in the tax rather than malt, hops etc. and with people being crushed by the rising cost of living across the board, disposable income is hard to come by and harder to justify spending on something like beer when we know it’s ultimately not that expensive to make )compared to its cost). If the tax was more comparable to other food items then of course we’d all jump on board with the breweries.

I heard someone recently say “A twenty ain’t twenty-ing like it used to, ya know?”

[kmar92]

37 minutes ago, NBillett09 said:

I agree with your comments @Aussiekraut and @Pale Man regarding too many varieties on tap at a time and also a saturation of different craft breweries, I guess my point wasn’t that the Gov should therefore pay the difference, I was more commenting regarding the way they so aggressively hike the tax on alcohol products makes it both a hard industry to be successful (and viable maybe?) in and possibly a hard industry to support. Seems like the majority of the cost of beer products would be in the tax rather than malt, hops etc. and with people being crushed by the rising cost of living across the board, disposable income is hard to come by and harder to justify spending on something like beer when we know it’s ultimately not that expensive to make )compared to its cost). If the tax was more comparable to other food items then of course we’d all jump on board with the breweries.

I heard someone recently say “A twenty ain’t twenty-ing like it used to, ya know?”

I think that in Australia we have the dubious distinction of having the highest excise on beer.

[Popo the Reprobate]

47 minutes ago, NBillett09 said:

I heard someone recently say “A twenty ain’t twenty-ing like it used to, ya know?”

That's a good way to put it.

[NBillett09]

In relation to the breweries having 15-20 different beers on tap and constant bring in new things, ie too much choice, I have often thought it better than have fewer beers that are just done really well like @Aussiekraut said.
Not exactly the same but makes me think of the quote from Bruce Lee "I fear not the man who has practiced 10,000 kicks. once, but I fear the man who has practiced one kick. 10,000 times."

Don’t indulge the beer of a man who brews 10,000 beers, but indulge in the beer of the man who has brewed one beer 10,000 times. Or something like that

[Aussiekraut]

12 hours ago, NBillett09 said:

I agree with your comments @Aussiekraut and @Pale Man regarding too many varieties on tap at a time and also a saturation of different craft breweries, I guess my point wasn’t that the Gov should therefore pay the difference, I was more commenting regarding the way they so aggressively hike the tax on alcohol products makes it both a hard industry to be successful (and viable maybe?) in and possibly a hard industry to support. Seems like the majority of the cost of beer products would be in the tax rather than malt, hops etc. and with people being crushed by the rising cost of living across the board, disposable income is hard to come by and harder to justify spending on something like beer when we know it’s ultimately not that expensive to make )compared to its cost). If the tax was more comparable to other food items then of course we’d all jump on board with the breweries.

I heard someone recently say “A twenty ain’t twenty-ing like it used to, ya know?”

The alcohol excise is a licence to print money. Automatically adjusted twice a year, it is a lawmaker's dream tax. It is also a ridiculously high tax. There is around $20 tax on a carton of full strength beer. As an example, in Germany, you can buy a crate of decent beer for less than our tax amount and it includes the tax already. 

But on the other hand, it shows that it isn't just the tax that kills the small breweries. It's the overall cost and in the end, their sales. Even with the tax removed, a carton of craft beer from a small brewery would still cost close to or over $100. For most people, that's simply an unacceptable price. 

On the other hand, a brewery has high costs but not necessarily the output needed to keep the cost down. I'd say one has to sell a lot of beer to live off making beer. 

[Hoppy81]

On 1/24/2024 at 7:55 AM, Aussiekraut said:

In the end, we have to ask the question, if it is the government's job to prop up unviable businesses? I'm all for lending a helping hand but where does it stop? And if we support one industry, don't we have to support all of them? The electricians, the butchers, the mechanics, etc. In the end, though, we all foot the bill as taxpayers. The government money has to come from somewhere and that is usually us. The uber-rich don't pay much or any tax, so it is the little folks who carry the burden as with everything. 

The breweries themselves have to take a good look at themselves, their business model and how they go. The expansion rate of some breweries is simply not sustainable. We've seen what happened to Ballistic. They had on brewery, which was doing quite well. Then they opened another tap room, another brewery and then two more. Too big too fast and then it all fell apart. Complaining about paying the same excise as the big corporations do isn't helpful. Some taxes are simply "unfair". The prime example is GST. The battler pays the same amount of GST on a loaf of bread as the billionaire does. One is hurt a lot more by missing those 10% in their hip pocket than the other. If I opened a brewery, I should know all of this beforehand. 

There is another problem I see with some breweries. Too much variety! Sounds odd, I know but as with a restaurant, it is better to have fewer dishes than an overabundance you have to cater for. Don't have 15 beers on tap, have seven or eight. It keeps the costs down and improves profit. And what's this DDDDDDDDDWCIPA nonsense about? Outdo your competition by making better beer, not beers with a few more Ds in the name. Compete with your fellow brewers, not with weirdness but with craftsmanship. And as important as being on the shelves in the retail chain is, it also adds costs in the form of transport for example. There are small breweries who don't sell their beer in shops at all. White Lies up here for example just moved its operations to a newly built brewhouse and only sells its beers in the two tap rooms. I spoke to the fella who owns it and he said he's happy the way it is now. Putting it on the shelves in bottle shops just adds stress nobody really needs.

I support small breweries as much as I can but on the other hand, and that is without trying to sound full of myself, I think my own beer doesn't have to hide behind those from commercial breweries and it is a lot cheaper for me to obtain. Not $120/carton but more like $40/2 cartons. 

100% agree with everything you've said.

I've been asked if I will open up a taphouse for Three Chins, at this point, absolutely not, it blows my mind how many microbreweries are at this point of time opening one up. People
Can not afford to pay the prices needed to make any money from a taphouse, this is why I supply kegerators to cafes and then supply my kegs to them. I make a small amount
Of money and they make their fair share, but it's on the side of their cafe products, not solely to pouring beer.

If I had to pay excise tax, I'd give it away, that tax is huuuuge.

[Hilltop hops]

7 hours ago, Hoppy81 said:

100% agree with everything you've said.

I've been asked if I will open up a taphouse for Three Chins, at this point, absolutely not, it blows my mind how many microbreweries are at this point of time opening one up. People
Can not afford to pay the prices needed to make any money from a taphouse, this is why I supply kegerators to cafes and then supply my kegs to them. I make a small amount
Of money and they make their fair share, but it's on the side of their cafe products, not solely to pouring beer.

If I had to pay excise tax, I'd give it away, that tax is huuuuge.

You might do alright wouldn't be too much competition where you are. I'm way to risk averse to start a business when I'm already making decent money in a full time job. Just gotta win that 200 mill Powerball next week! 

[Hoppy81]

24 minutes ago, Hilltop hops said:

You might do alright wouldn't be too much competition where you are. I'm way to risk averse to start a business when I'm already making decent money in a full time job. Just gotta win that 200 mill Powerball next week! 

Not with our local Council. We just had a local brewery a bit bigger than my setup try and setup a taphouse, the Council were absolutely useless and if they followed it through it would've cost them around 500k to open up, then run 2-3 nights a week. I'd be surprised if you ever breakeven with the lack of customers in our small town and the ever increasing prices of ingredients, transport, excise tax etc. 

I'll stick with cafes and popup markets for the foreseeable future. My wife owns her own Salon and I work out the mines, so happy for it to be around that size 

Edited January 26 by Hoppy81

[iBooz2]

9 hours ago, Hoppy81 said:

I supply kegerators to cafes and then supply my kegs to them. I make a small amount
Of money and they make their fair share, but it's on the side of their cafe products, not solely to pouring beer.

If I had to pay excise tax, I'd give it away, that tax is huuuuge.

@Hoppy81 I would have thought that because you are the alcohol manufacturer and the fact you are on-selling it to the commercial market then you would be responsible for record keeping and have to pay the excise tax anyway.

I have had many people over the last year or so wanting to buy kegs of my beers, but I respectfully decline due to possible tax implications.

[Back Brewing]

5 minutes ago, iBooz2 said:

@Hoppy81 I would have thought that because you are the alcohol manufacturer and the fact you are on-selling it to the commercial market then you would be responsible for record keeping and have to pay the excise tax anyway.

I have had many people over the last year or so wanting to buy kegs of my beers, but I respectfully decline due to possible tax implications.

You could sell them the cube as a FWK then they add the yeast and ferment it is this correct?

[iBooz2]

12 minutes ago, Back Brewing said:

You could sell them the cube as a FWK then they add the yeast and ferment it is this correct?

Yep, I suggested that, but they do not have "the gear" to finish it off.  Plus, one guy is an ex-home brewer and probably just got lazy and all he wants is to serve it and drink it at weddings, parties and everything.

It's a bit different if you are supplying someone with a finished alcoholic product that has been produced in Australia for home consumption in a commercial premises for example (i.e. home consumption means for consumption in Australia and not exported).  Note that I am unsure of rule of law in this regard so gave it a swerve.

Edited January 26 by iBooz2

[Hoppy81]

21 minutes ago, iBooz2 said:

@Hoppy81 I would have thought that because you are the alcohol manufacturer and the fact you are on-selling it to the commercial market then you would be responsible for record keeping and have to pay the excise tax anyway.

I have had many people over the last year or so wanting to buy kegs of my beers, but I respectfully decline due to possible tax implications.

You thought correctly. All records are kept and submitted to the ATO, you start paying excise when you hit 350k.

You are not allowed to sell any alcohol without a license, its not just a tax implication.

[NBillett09]

@Hoppy81 it’s only illegal if you get caught