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Big brewers defend against the rise of craft

The big brewers have responded to craft beer’s rising market share by doing one of three things: buying them, collaborating with them, or building their own. But in Australia a fourth defence has emerged as well – the ‘contemporary beer’ strategy. With COVID-19 already impacting people’s discretionary spend, it is predicted this relatively new combative approach will continue to be used in the fight against craft.

Drinks market analysis company IWSR said in the past decade global craft beer sales have trebled, and it has most often been the longstanding brands in the mainstream segment that have borne the brunt of the rise. In markets across the globe, these brands have been on the retreat as the craft revolution has gained momentum.

In Australia, however, IWSR have been tracking the ‘contemporary beer’ segment, which is best highlighted by the likes of Carlton & United’s Great Northern Brewing Co and Frothy, and by Lion’s Iron Jack and Furphy. As an example, Great Northern is now one of Australia’s biggest sellers and was one of the reasons Asahi saw value in buying out CUB. A recent report by IRI also showed that sales of contemporary beers like Great Northern went up during the panic-buying phase witnessed at the outset of COVID-19.

“The speed with which these new contemporary beers have established themselves has demonstrated that although many beer drinkers are looking for alternatives to the big-name brands that have historically dominated the marketplace, this demand is not always serviced by craft products,” said Tommy Keeling, IWSR’s research director for Asia-Pacific.

“The main players can respond to the rise of craft not only by joining them, but by possibly also launching new products that respond to the latest consumer needs and that can be scaled up quickly.”

Contemporary beers are by definition modern beers, launched by the major brewers, that are sculpted and massaged to incorporate the latest contemporary consumer trends. They are priced competitively when compared to the mass-market beer brands, and below the craft beers on offer.

As in other countries, the craft segment in Australia is vibrant, but their price point and target market had given them less traction with a sizeable part of the Australian market, IWSR said.

“A vacuum had opened up for a product that would appeal to consumers tiring of the traditional beer brand offerings but who felt disenfranchised by the craft movement. As a result, the contemporary beer brand has successfully been able to occupy this newly vacant middle ground.

“In a post-COVID world, the beer market will see much upheaval, and we are likely to see the rise of contemporary beers elsewhere too, particularly in what is likely to be a price-sensitive era.”

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