GLENN COOPER: Keynote speaker at the Australia Market Educational Conference

AuTT Header DatesWe are very excited to announce Glenn Cooper (Chairman, Cooper Brewery) as the first of our keynote lineup for AuTT Conference 2015!

speaker_GLENN_COOPERGlenn is the current Chairman of Coopers Brewing, Australia’s largest independent brewing company and named in 2011 as the world’s top family business in 2011. He was until June 2014 the Marketing Director of Coopers. He is also the current Chairman of Australian Made and Australian Grown.

Glenn will be talking on Managing and Growing Your Beer Brand: Specialist Brands Against The Global Breweries.

Glenn held the the responsibility of Marketing and oversaw the launch of numerous beers in the Coopers range, including Dark Ale, Extra Strong Vintage Ale, Mild Ale, Premium Lager, and more recently, Coopers Clear. Glenn will be sharing his insight on management and sales at the 2015 AuTT conference in September.

registernow

AuTT Conference Tickets

 

Australian Craft Beer Market Update June 2015

Beer_Industry_Report_Australia

The overall beer market in Australia continues to be challenged in volume by wine and cider, with craft beer the consistent savior, albeit off a small base and realistically large enough sustainable volumes enjoyed only by those brands with national distribution.

This is the first part of David’s (Australia Trade Tasting MC) update and outlines the general trend of craft beer in Australia for the half of 2015.  Future posts with detailed insight into the industry will be posted regularly leading up to the conference. Please check back regularly.

Australia has traditionally been a beer drinking nation, however current trends are seeing Wine equaling Beer consumption by 2018 and Cider being the overwhelming fastest growing liquor category. The growth categories in beer continue to be Craft Beer, both in off- and on-premise outlets, however the trends appears to be moving towards off-premise with consumption at home on the rise.

Craft Beer continues to see exceptional year on year double digit growth in liquor stores with 24.2% for local craft and 12.1% for imported craft value growth, from premiumisation with more consumers becoming more discerning with their choices and spend on beer. There is a real opportunity for craft brewers to work with liquor stores to drive sales particularly with events and social media. There is some PR currently for excise tax reform being driven by the Spirits Council for one volumetric tax system.

australia-mapAustralian Bureau of Statistics Beer Volume Year ended 30 June 2009-2014

  • Total Beer Volume -6.7%
  • Full-Strength Volume -7.6%
  • Mid-Strength Volume +16.7%
  • Per Capita 92.37 L p.a. -14.5%

Full strength beer remains the most popular type of beer, accounting for around 75% of all beer in 2013-14”. “Over the past decade we have seen the popularity of mid strength beer (19% of total beer consumed) grow at the expense of low strength beer (5% of total beer consumed). Between 2012-13 and 2013-14 the volume of mid strength beer increased 6.8% while full strength beer increased 0.4%. Low strength beer recorded a decrease (down 9.0%).

The volume of pure alcohol available for consumption in the form of beer increased by 1.0% and wine by 0.2% between 2012-13 and 2013-14. The volume of beer available for consumption increased 1.0% The volume of pure alcohol available for consumption in the form of Ready to Drink (pre-mixed beverages) decreased by 4.3% and spirits by 3.6% during this period. “Across all alcoholic beverages, there were 9.7 litres of pure alcohol available for consumption in 2013-14 for every person in Australia aged 15 years and over,” said Louise Gates from the ABS. “This is the lowest level since the early 1960’s.”

According to data on ‘Apparent Consumption of Pure Alcohol, Beverage type as a proportion of all alcohol from 1961 – 2014, Beer is down to 41%, all other liquor is up – Wine continues to converge to equal beer, now at 37.5% and expected to equal beer by 2018.

David_Lipman

Get inside insight into the craft beer industry and how to position your company to succeed in the competitive marketplace at the Australia Trade Tasting Conference on Sept 1 and Sept 2, 2015.  Learn more about the AuTT Conference here.

 

Stuart Gregor To Speak On “How To Make People Fall In Love With Your Brand”

Stuart Gregor, Founder Of Liquid Ideas, Four Pillars Gin and President Of Australian Distillers Association to speak at AuTT Conference 2015!

Stuart_Gregor_at_Autt

Responsible for innovative PR, communications, sales, launches, presenting and talking, Stuart is a veteran of 20 years in the drinks business and the world of lifestyle public relations and events. He has launched and promoted dozens of premium brands in wine, spirits and beer and his business ‘Liquid Ideas’ is one of Australia’s leading PR agencies.

We are excited to announce that Stuart Gregor has been added as a keynote speaker at the Australia Trade Tasting and Conference.

Stuart is a regular commentator on marketing and sits on the board of food rescue charity OzHarvest, chairs Australia’s Public Relations Council and follows every sporting code imaginable. He is obsessed by barrel aged gin and Negroni’s with a twist. Stuart is also the president of the Australian Distillers Association and Founder of Four Pillars Gin.

Come and Be Inspired by Stuart as he presents some genuinely honest ideas on “How to make people fall in love with your brand.

Looking to learn more on beer, spirits or wine sales and distribution? Get involved with Australia Trade Tasting educational conference on 1st and 2nd September in Melbourne.

new_blog_headerPlease book using the below form now

Australia’s First Families of Wine to launch in USA May 2015

Leading family wineries tour to showcase Australian wine heritage and modern diversity.

AFFW_LogoFounded in 2009, Australia’s First Families of Wine (AFFW) came together to work collectively to raise the profile and provenance of quality Australian wine, at home and around the world, through fine wine and heritage tastings, consumer and trade education and industry leadership.

The group consists of twelve of Australia’s prominent family wineries — Brown Brothers (1885), Campbells (1870), d’Arenberg (1912) , De Bortoli Wines (1928), Henschke (1868), Howard Park (1986), Jim Barry Wines (1959), McWilliam’s Wines (1877), Tahbilk (1860), Taylors (1969), Tyrrell’s Wines (1858) and Yalumba (1849).

Recently AFFW announced the appointment of Robert Hill-Smith from Yalumba as their new chairman. Hill-Smith assumes the chair from Mitchell Taylor of Taylors Wines and is the fourth chairman of the initiative. “Internationally, our mission is to educate, share and celebrate Australia’s fine wine heritage, quality, and diversity with wine enthusiasts around the world and encourage demand for Australian fine wines. Collectively we represent 16 wine regions, 4 states, 48 generations of winemakers and over 1,200 years of experience,” stated Hill-Smith.

Angela Slade, Regional Director Wine Australia North America enthuses, “Australia’s First Families of Wine is a showcase for the multi-generational story of Australian wine, from early days in the 1800s, through to the modern wine story from the 1950s, to the regional and stylistic evolution of today.” Slade continues, “This US launch, led by Robert Hill-Smith, represents both wine heritage and a look at Australia’s long-term sustainability well into the future.”

NORTH AMERICA TOUR – MAY 2015:
The tour, coordinated by Wine Australia, will include 13 events over 14 days in 5 cities across the USA and Canada. US launch events are planned for San Francisco (May 18) and New York (May 20) before heading to Canada for Montreal (May 21-22) Toronto (May 25-26) and Vancouver (May 28-30).

FAMILY MEMBERS ON TOUR 2015:
Robert Hill-Smith (Yalumba), Ross Brown (Brown Brothers) , Colin Campbell (Campbell’s), Chester Osborn (d’Arenberg), Darren DeBortoli (De Bortoli), Stephen & Prue Henschke (Henschke), Jeff Burch (Howard Park), Peter Barry (Jim Barry Wines), Scott McWilliam (McWilliam’s), Alister Purbrick (Tahbilk), Justin Taylor (Taylors/Wakefield), and Bruce Tyrrell (Tyrrell’s).

FOR TRADE: Speed Dating Trade Event 

Please join AFFW for a fast-paced tasting event to introduce Australia’s First Families of Wine.  11 multi-generational wine families have teamed up to showcase Australia’s rich wine heritage, celebrated wine stories and modern diversity.  In a speed-dating format, and against the clock, 11 winery hosts will each have just 5 minutes to introduce their winery, family and special wine to the group before the bell rings for rotation.  Following the hour long speed dating experience, guests will have the opportunity to mingle with their winery hosts for a walk-around tasting featuring additional wines from each winery.

May 18th, 2015 from 2.30pm – 5.00pm at the Press Club, San Francisco. REGISTER YOUR INTEREST HERE: http://affwunlocked.com.au/usa/san-francisco/

May 20th, 2015 from 2.30pm – 5.00pm at The Press Lounge – New York. REGISTER YOUR INTEREST HERE: http://affwunlocked.com.au/usa/new-york/

FOR MORE INFORMATION:

Donna White
Donna White Communications 203 558 4262 donna@donnawhitepr.com

Angela Slade,Wine Australia Regional Director, North America, angela.slade@wineaustralia.com

ABOUT AUSTRALIA’S FIRST FAMILIES OF WINE:
Please visit: http://affwunlocked.com.au/ and www.affw.com.au
Join the conversation: Twitter @AFFWine and Facebook https://www.facebook.com/AFFW1

• Australia’s First Families of Wine (AFFW) initiative was launched in August 2009 at the Sydney Opera House
• AFFW launched in the UK in 2010, Canada in 2011, China in 2013 and runs an Australian program ‘Unlocked’
• The AFFW charter is to engage consumers, retailers, restaurateurs and industry colleagues around the globe to understand the quality of Australian wine, appreciate its character, and the personalities behind the brands
• Strict criteria to establish AFFW include being family controlled, having multiple generations involved in the business, ability to offer a tasting of 20+ vintages of their iconic wine, owner of established 50+ year old vineyard, best environmental practices throughout their businesses, and active involvement in the Australian wine industry bodies and organizations.
• Reference: Heart & Soul Australia’s First Families of Wine by Graeme Lofts with forward by James Halliday

 

Looking To Find Wine Importers In Australia?

Finding import partners in Australia to take on your wine brands means first understanding the Aussie market and then targeting the best companies to work with. With no distribution tier restrictions between supplier and retailer like those of the three-tier system, wine distribution in Australia is a lot less complicated than in the US market.  However, determining how to best approach the Aussie market means working closely with teams on the ground and optimizing your brand for success.

Here are a few tips on how to garner attention for your wine brand and forge a successful partnership with Australian wine importers.

Address the Aussie Market

  • Invest in a local design agency
  • Invest in Research (Roy Morgan, Survey Monkey & media readership/subscriber lists for what consumers are the target audience IRi Aztec &LMAA for sales data)
  • Enter your wines in Aussie competitions and trade shows
  • Use authentic branding to tell your story

Understand Australian Distribution System

  • Australia is a 2 tier system
  • Parallel Importing is legal
  • Approximately 14000 On-Premise and 9000 Off-Premise Licensed Retailers
  • Over 40,000 Non-traditional licensed venues (clubs, cafes, restaurants, etc.)
  • Excise as an indirect tax
  • understand COGS, margin and retail pricing to ensure competitive offering
  • Consider local consultant professional
  • Decide on route to market

Sales and Marketing

Offer your importers a detailed marketing plan that shows that you are willing to do everything it takes to make your brand successful in Australia.  This means you need to present a solid outline of the following:

  • social media
  • events, meet the Vintners, dinners, festivals, etc.
  • eNewsletter
  • marketing budget allotment to Australia
  • PR
  • point of sale
  • merchandise
  • Retailer and Distributor Programs (in-store tastings, Buy 10 get 1 free, discounts, samples etc.)

To get you started, here is a List of Australian Wine Importers and their company profiles so you can target the right potential partners.

Echelon Wine Partners
Echelon proudly presents a portfolio of dynamic and innovative wines from some of the world’s finest wine producing regions. Every wine in the portfolio is modern in approach and expresses its origin.

World Wine Estates
World Wine Estates (WWE) is a wine importer and distributor that was established in 1988 as the import and wholesale arm of the Ultimo Wine Centre, Sydney’s famous premier wine retailer. WWE specialised in imported wines, especially French. The current owner and director, James Johnston, joined WWE in 1999. In 2005 by a mutual amicable agreement, WWE became a separate company to Ultimo Wine Centre.

Elite Wine Importers
Elite Wine Importers is currently a small family run business. It first began in 1994 when it was seen that there was a lack of Portuguese liquor products available to those of Portuguese decent and also for those who had travelled to Portugal and were hoping to find a taste of their holiday back here in Australia.

Living Wines
Living Wines is a Wine Importer in Australia of organic, biodynamic and natural wines from small producers in Europe. The wines are always low in sulphur and have no other additives.

Eurocentric Wine Imports
The goal of Eurocentric Wine Imports is to bring Australian drinkers great wine from Europe and European-styled wines from other regions such as New Zealand and South Africa in as good condition as if you drank them at the winery. The company is run by Neville Yates, a former career journalist who succumbed to his passion, embracing a combination of his loves — wine, people and travel. He meets the winemakers in the vineyards and in the cellars, tastes at the source, negotiates good deals, chooses reliable refrigerated transport and delivers to Australia great wines at a reasonable cost through the retailers, restaurants and wine bars you know and trust.

Grand Millesime Wine
Grand Millesime are specialist importers of fine French Wine. They are a young and energetic company who specialize in high quality wines, in particular the wines of Burgundy in France. They have a blossoming portfolio of hand-selected wines, all tasted at the domaine and selected based on quality. They travel to France several times a year to taste and buy and actively search out new, small and exciting producers.

Barrique Fine Wines imports
Barrique Fine Wines imports premium wines from France, with a particular emphasis on Burgundy. It is shipped straight to climate-controlled storage from where they send it direct to our clients’ home, offices, restaurants and bars.

Andrew Guard Wine Imports
Andrew Guard Wine Imports is a specialist importer and merchant of fine wine and spirits. It is owned and operated by Andrew and Kirsten Guard. Based in Sydney, Australia, thay have many years experience in the wine, restaurant and retail trade. The vignerons they represent are amongst the best in the world, producing very fine wines with minimal intervention that are reflective of their origins.

Vintage and Wine
Vintage & Vine is a small specialist importer and wholesaler of wines and spirits based in Sydney and started by Kevin Facey and David Burkitt in 2000.  The producers represented by Vintage & Vine are all chosen on the basis of quality, typicity and value. Quite simply this selection of wines represents not only the wines we enjoy but those that we feel to be among the very best from each region.

Corkscrew Cellars
Corkscrew Cellars is a group of independently owned and operated liquor retailers across Sydney. Being independent means they can provide a more personal approach to servicing your needs.Each store is as individual as the customers they serve and the products and services they provide.

Enoteca Sydney
Enoteca is a Sydney based wine company who import Italian, Austrian, French, German and Hungarian wines. They also sell a select few Australian and New Zealand wines.

Negociants Australia
Negociants Australia has been an importer of the world’s finest wines since 1984 and are proud to represent outstanding family owned wineries from Australia and abroad. Our dedicated and knowledgeable team of wine professionals is committed to the highest levels of customer service and quality representation of the wines that we are honoured to distribute. It is this combination of portfolio and people that makes Negociants Australia one of this country’s leading fine wine merchants.

Four Seasons Fine Wines
Four Seasons Fine Wines seeks to exceed the expectations of customers and principals with knowledge, integrity and service. They aspire to be an industry leading wine distribution company by representing and working with producers who articulate strong regional and quality excellence. These attributes combine to create a premium portfolio with diverse regional representation.

Looking for Aussie Importers?  Exhibit your brand at Australia Trade Tasting and get your brand in front of independent and chain buyers from leading retailers, importers and distributors.  Connect today at AuTT.

AuTT-WBM_620x200

What U.S. Wine Importers are Looking For

We are pleased to announce that Deborah M. Gray will be speaking at Australia Trade Tasting on ‘What U.S. Importers are Looking For & How To Keep Them Interested.’

deborah_gray_400

Deborah M. Gray, an Australian native and entrepreneur, founded her U.S. wine importing company, The Australian Wine Connection, in 1992 at a time when women wine business owners were scarce and knowledge of Australian wine was almost nonexistent in the U.S. Her first imports consisted of her family’s brand, The Cowra Estate, and a collection of small, family-owned vineyard brands. Deborah ultimately achieved broad national distribution with a diverse portfolio of iconic, highly rated Australian wines before selling her company in 2007.

Today, Deborah lives in Southern California where the emphasis in her company, Bluestone Wine Solutions, is on consulting and assisting others around the country with their importing needs and portfolios. Her second book, Wine Exporting to the U.S. – Strategies for Success, a comprehensive guide for the foreign wine supplier, will be published in 2015.

Come and Be Inspired by Deborah as she presents useful strategies and tips on “What U.S. Importers are Looking For & How To Keep Them Interested.”

REGISTER NOW

Don’t miss out on the remarkable content at Australia Trade Tasting this year. For More information on the great line-up of speakers at AuTT, please Click Here.

AuTT Header Dates

Top 10 Distribution Tips For Local and Imported Craft Breweries in Australia

10 Tips for Beer Distribution in Australia

Looking to find new distribution partners in Australia for your Craft Brewery?

Wondering if you should open your own Brew Pub retail store or partner with large wholesalers?

David Lipman, founder of Beer & Brewer magazine and Drinks Hub, outlines ten top tips for distributing your craft beer in Australia.

With 3000+ local and imported beers regularly available in Australia and room for only 150 beer SKUs in a bottleshop, or 30 in a pub, does a craft brewery open their own retail venue to guarantee distribution, but lack volume, or go for volume in the wholesale market with lower margin and fierce competition? Beer Distribution in Australia has a lot less barriers to entry in the supply chain compared to the 3-tier system in the USA. However, with a small population and high production costs per carton compared to imported beer, local craft brewers really need to do their business planning prior to start-up to ensure the route to market chosen suits the target retail price, category/style of beer, brand story and cash flow of the business.

Distribution and excise are two of the most underestimated items in the business of brewing by craft breweries. 

1.       Have a quality product and credible brand identity/story/packaging

  • Invest in a consultant brewer or appoint a head brewer for the recipe development
  • Invest in a design agency for the packaging (label, cluster or other, cartons, bottle, decal, tap handles)
  • Invest in research (Roy Morgan and Survey Monkey or media readership/subscriber lists for e.g.) on what consumers are the target audience and sales data (IRi Aztec and the LMAA) on what styles and categories your beers will sit in (i.e. what are the best-selling beers in the regions and categories you are positioning your brand in.)
  • Enter your beers in competitions to prove quality as some retail beer buyers will buy based on gold medals and trophy winners even though consumers will rarely buy craft beer based on awards.  Consumers tend to buy based on occasion, price and the brand story most of the time.
  • Ensure the brand story is authentic, original, credible, and you have brand notoriety in your local market to prove its popularity. The brewer is the rock star and consumers love meeting the brewer while the region the brand is from (or the history or circumstance the brand was established) is important to promote the story. Don’t just focus on selling the brand based on quality and awards.

Heat is a major contributor to aging the beer, particularly in transit from brewery to retailer as it’s expensive to transport beer in cold-freight. Pasteurization heats up the packaged beer for a short period of time, it is not affected by heat in transit as much as an un-pasteurized beer. Craft beer is all about flavour; it’s a selling point to be unfiltered and unpasteurized. Pasteurization is said to remove 30% of flavour, however it all depends on your distribution model and the style of beer.

If you have a brew pub then there is no need for pasteurization as there is no time period from beer being transported from the brewery to the retailer and very little time sitting on a shelf or in a keg. However for the wholesale market, flash or tunnel pasteurization should be considered to control quality rather than let heat affect the beer for extended periods of time. Given beer is very rarely cold-freighted all the way from brewery door to the retailer shelf, the beer is not being consumed as the brewer intended. This is particularly the case for lagers, which are fermented at colder temperatures and affected by heat more than ales. The cardboard smell of heat affected beers is particularly noticeable in lagers that have little aroma or full-flavoured taste to hide behind.

2.       Understand Australian distribution (on- and off-premise), regulations, excise, and parallel importing

When the brewer understands the challenges, pressures, margins and price points of the importer/distributor and retailer, it makes the relationship and sell-in professional and respectful.

There are approximately 14,000 on-premise and 9,000 off-premise licensed outlets nationally. However, there are a lot more licensed venues when you include Restaurants, Clubs and Cafes. In NSW (18,000+) and Vic (20,000+) alone there are 38,000+ non-traditional licensed venues. Restaurants are a great target for craft beer. Given the beer lists are small, it makes the chance of getting picked by the consumer much better. Restaurants are also more willing to pay the listed wholesale price because they can mark the beer up more than bottleshops. Craft beer is all about pairing great beer with great food and restaurants also give the consumer that ultimate experience.

Parallel importing is legal in Australia, meaning an imported beer can be imported via a wholesaler and not the brewery. Retailers can buy direct from breweries and exporters, there is no 3-tier system like the USA.

Tap and Fridge Contracts exist in the on-premise and, with the average number of taps per pub being 8, venues are very limited in what they can put on tap outside the contracted brands. The opportunities for third parties (not in a contract) are guest taps, approaching freehouses with no contracts, or hoping the hoteliers catch on that customers are demanding more variety than what the contracted breweries are offering. The last opportunity hinges on the hotelier having not contracted out 70-100% of their taps, and hoping for 50% or less.

Given tap contracts, alternative routes to market are using growlers or stand-alone draught beer systems which provide the venue another tap point for the bar or event/function room.

Excise is an indirect tax as a fixed cost to draught and bottled beer. It goes up every 6 months by CPI. Its payable in seven days of leaving the brewery or bond store, even though it’s not paid for, for up to 90 days by retailers which can create a cash flow crisis for many craft brewers. There is an excise rebate for local microbreweries, up to $30,000 per annum received in the following financial year. Microbreweries are able to apply with the ATO to pay excise in 30 days rather than seven days. Many distributors or brewers will use a bond store to postpone payment of the excise until the beer is ordered and dispatched from the bonded site to allow maximizing production runs as well as minimize costs per carton and help margins and profitability.

3.       Understand COGS, margins and retail pricing for the category your beer sits in – are you competitive? Do you start contract brewing first or own equipment?

Distributors work off around 30% margins and retailers will buy cartons around a 25% margin while making around 40% on 6-packs and more on single bottle sales.

Repeat business is crucial to run a sustainable business. If your price is too high you run the risk of your beer being ordered once by consumers looking to try it one time before they move back to their regular, more affordable craft beers (known as repertoire drinkers.) However if you have low COGs or low fixed operating costs and are happy with less profit dollars, then higher prices can work if you sell the volumes needed to cover your costs.

The average retail price for a carton of local craft beer (any style, any ABV) in Australia is $64.50, whereas for imported craft beer its 13% higher at $74 per carton (8 litres). As mentioned in a previous article on the AuTT blog, the average ex-excise brewer wholesale price for imported craft beer is $17.50 and local craft beer is more like $35. Being 100% higher, local craft brewers are faced with a lot of competition from imported beer. However with the AUD/USA drastically softening (end of 2014) this will help local craft brewers’ price competitiveness.

Most consumers are purchasing craft beer as 6-packs, mixed 6-packs, or by the bottle. If you are pricing your beer to be sold above these prices then volumes will come down. It’s a matter of summing your COGs, the fixed operating costs you need to recoup, and your distributor and retailer margins to arrive at a retail price that is competitive against the mainstream craft or smaller craft brewers.

To work out excise here is the calculation: You need to find out the excise per litre of alcohol for kegs (>49.5 L) which is 40% less than kegs/bottles (less than 49.5 L).

Formula: Volume in Litres of the package x (Alcohol strength – 1.15) x Per Litre Cost of Alcohol.

E.g. from excise prices in February 2014

·         Carton of 24 x 330mL 4.3% ABV = 7.92 x (4.3-1.15) x $46.30 = $11.55+GST.

·         50 L keg of the same beer 4.3% ABV = 50 x (4.3-1.15) x $32.60 = $51.35+GST.

If price is important then you could contract brew to begin with, then once beer volumes get large enough you can invest in brewing equipment. This option allows the capital to be invested in sales teams, recipe development, packaging, promotion, travel, events, etc, and not sitting in stainless steel.

4.       Decide on the route to market and volumes to be profitable – wholesale or retail?

For the most part, this comes down to how much capital you have or can raise (for items in point 1),  how much profit you wish to make for shareholders, and if you going to work in the business with long hours or hire staff. The retail route is very profitable from a production and sell price perspective, while high costs in rent, staff, loadings, and other overhead such as marketing, is needed to ensure enough daily patronage. From a production point of view, you can make decent returns from producing 100,000 litres a year. On the other hand, if you go the wholesale route, you need to produce around 1-1.5 million litres a year to be sustainable and decide on owning equipment or contract brewing.

5.       Retail Distribution – Fresh beer and recruiting or partnering with a hospitality and marketing team to ensuring daily patronage

As mentioned in point 4, this is the most profitable form of selling craft beer and requires a fraction of the beer to be produced to be sustainable, as long as the venue itself is run efficiently and marketed to the local community. There are approximately 70 brewpub/breweries with hotel operating hours out of the 200 breweries in Australia.

Craft Beer Distribution in Australia

6.       Wholesale Distribution – Pasteurization and deciding on whether you will have a sales team, use a warehouse/logistics company, or appoint a distributor/retailer

As mentioned in point 4, given the costs of packaging and the fact that excise is 40% higher in bottles (unless you focus on 50L kegs, which is stifled by tap contracts), you need to brew a lot more beer to make the business sustainable.  See point 1 regarding considering pasteurization for the wholesale market, it’s a necessity for export.

There are three clear options in deciding the route to market for wholesale and they depend on your capital raising and how much volume you plan or need to achieve to meet profit targets:

(i)      Have your own sales team

This is the most ideal scenario.  As you have your own employees representing only your brand(s) in a highly competitive market, you know your brand is #1 on the list and #1 priority. The biggest obstacles in being able to use this route are having enough beer sales to support the sales team and a retailer or distributor’s insecurity in ccommitting to such large volumes with no track record, unless you have some serious ATL and BTL marketing budgets. A logical plan would be to start with point (ii) or (iii) then aim to get to have your own sales team in the medium to long term.

(ii)    Use a warehouse/logistics company with brand ambassador(s)

Start-ups with little budget or small overheads, can do the sales themselves, and grow the distribution organically, albeit over a longer period than point (iii) below. The important part of this route is to ensure you have warehouses on the east and west coast (given the sheer size of Australia) to store product close to customers. The reason for both warehouses is so that you can provide customer service with a short turnaround time from order to delivery and you can provide metro freight costs, rather than interstate freight costs. You will need to do the sales yourself, or appoint brand ambassadors/sales reps to generate the orders, for the warehouse/logistics company to pick/pack the orders for you. Consider if you can find bonded stores to warehouse your stock on the east and west coast, to help paying excise later. See point 7 below for a company list.

(iii)   Appoint a distributor/retailer

More and more these days, retailers are time poor and getting bombarded by sales reps from individual brand owners. Retailers will see around 40 reps a week for existing supply, let alone new brands/SKUs. Retailers prefer to talk to distributors who they already deal with that represent a number of brands all handled by the one account manager. This step ensures your brand is sitting in a portfolio that has relationships already in place. There are a number of distributors to choose, such as wine only (where you beer brand is their exclusive beer brand), a drinks distributor, or a dedicated craft beer distributor. It’s important, for any of these, that you ensure your brand doesn’t sit in the portfolio. You need to be continuously communicating with all reps looking after your brand.  Inform them of the product, its USPs, sales data success in other markets, awards, festivals/dinners at which customers can meet the brand team, sales targets, incentives and promotional support (as mentioned in point 9 below).  It’s a matter of asking what they need and what you can afford, to ensure volumes are met so that both you and the distributor are making profit.

Another option is go direct to the retailer as they can act as importer / distributor / retailer. This can be achieved via offering your brand exclusively to the retailer (if they are large enough), certain SKUs exclusive to the retailer, or brewing specific SKUs under an exclusive brand name for the retailer.  The last option gives them a lot of rapport with the beer to sell it, as it’s their own beer and they make more margin.

7.       Warehouse/Logistics Companies in Australia

Elite Logistics NSW www.elitewinelogistics.com.au
Warehousing & Distribution Solutions NSW www.wads.com.au
Locke Logistics Vic www.lockelogistics.com.au

cropped-Australia_tastings_home_0922-1.jpg

8.       Distributors in Australia

Type Distributor/Logistics Company State Web site
Beer Artisans of Amber NSW www.artisansofamber.com
Beer Beer Importers & Distributors National www.bidbeer.com
Beer Experienceit / Birra Italiana NSW www.birraitaliana.com.au
Beer Hops and More NSW bradflowers@hotmail.com
Beer Nordic Beverages (Balmain) NSW http://nordicbevs.com/
Beer Micro Beer Club NT www.microbeerclub.com.au
Beer Australian Trade Partners Qld www.australiantradepartners.com.au
Beer Calibre Craft Beer Trading Co Qld www.calibrebeer.com
Beer Europacific Liquor Pty Ltd Qld www.europacificliquor.com.au
Beer Fluid Boutique Liquor Qld www.fluidboutiqueliquor.com.au
Beer Decant Beer SA http://decantbeer.com/
Beer Palais Imports SA www.palaisimports.com.au
Beer Beer Importers & Distributors Vic www.bidbeer.com
Beer Better Beer Imports Vic www.betterbeerimports.com
Beer Boutique Beverage Distributors Vic www.boutiquebev.com.au
Beer Kaya Group for Efes Pilsener Vic www.kayagr.com
Beer Northdown, Craft Beer Movement Vic www.northdown.com.au
Beer Trumer Australia Pty Ltd Vic www.trumer-australia.com
Beer Beverage Australia Pty Ltd WA www.beverageaustralia.com.au
Beer PDH Imports WA phdimports@bigpond.com
Beer Trumer Australia WA www.trumer-australia.com
Beer/Cider DrinkWorks NSW www.drinkworks.com.au
Beer/Cider Phoenix Beers WA www.phoenixbeers.com.au
Beer/Cider The Beer & Cider Company WA www.beerandcider.com.au
BWS Bevchain National www.bevchain.com.au
BWS Bacardi Lion NSW ww.bacardilion.com
BWS Beach Ave Wholesalers NSW www.baw.com.au
BWS D’Aquin Group (NILWA) NSW www.daquinogroup.com.au
BWS Diageo Australia NSW www.diageo.com.au
BWS G H Cole & Son NSW www.nilwa.com.au
BWS Granduer Brew NSW www.grandeurbrew.com.au
BWS Kollaras NSW www.kollarasgroup.com
BWS LION Co NSW www.lionco.com.au
BWS Peter Doyle Cellars NSW www.nilwa.com.au
BWS Pure Beverages Pty Ltd NSW www.purebeverages.com.au
BWS Suntory (Aust) Pty Ltd NSW www.suntory.com.au
BWS Liquid Specialty Beverages Qld www.liquidsb.com.au
BWS Rivercity Wholesale Liquor Qld www.rivercity.com.au
BWS Empire Liquor SA www.empireliquor.com.au
BWS VOK Beverages SA www.vok.com.au
BWS Polkadot Liquor Tas www.polkadotliquor.com
BWS BDS Marketing Vic www.bdsmarketing.com.au
BWS Beach Ave Wholesalers Vic www.baw.com.au
BWS Enoteca Sileno Vic www.enoteca.com.au
BWS HT Beverages Vic www.htbeverages.com.au
BWS FM Liquor WA www.fmliquor.com.au
BWS Liquid Mix WA www.liquidmixwa.com.au
BWS Food Combined Wines and Foods NSW www.combinedwines.com.au
BWS Food Blackwood Lane Vic www.blackwoodlane.com
BWS Food Festival City Food & Liquor Vic www.festivalcitywines.com.au
Chinese BWS Food ETTASON Pty Ltd NSW www.ettason.com.au
Distributor ALM Liquor National www.almliquor.com.au
Distributor Hotel Liquor Wholesalers National www.bottlemart.com.au
Distributor ILG Co-operative Ltd NSW www.ilg.com.au
Distributor Paramount Liquor Vic www.paramountliquor.com.au
Distributor Premium Beverages Vic www.premiumbeverages.com.au
Distributor S & P Liquor NSW peterpizanis@optusnet.com.au
European BWS Urban Beverage Imports NSW www.urbanpurveyor.com/urban_imports
Hospitality Stirling Global Services NSW www.gohospitality.com.au
Japanese BWS Food Japan Food Corp NSW www.jfcaustralia.com.au
Logistics/Warehousing Elite Logistics NSW www.elitewinelogistics.com.au
Logistics/Warehousing Warehousing & Distribution Solutions NSW www.wads.com.au
Logistics/Warehousing Locke Logistics Vic www.lockelogistics.com.au
On-premise NILWA National www.nilwa.com.au
IBEV GLOBAL P/L Vic www.ibev.com.au
RTS The Daiquiri Group Qld www.daiquirigroup.com
Spanish wine/cider/beer Broadway Liquor NSW www.broadwayliquor.com.au
Whisky barmania! NSW www.barmania.com.au
Wine Red & White National www.redandwhite.com.au
Wine Bacchus Wine Merchant NSW www.bacchuswinemerchant.com.au
Wine Vintners NSW www.vintnersmerchants.com.au
Wine Off the Vine Wine Merchants SA www.offthevinewines.com
Wine Samuel Smith & Son (Yalumba Wine Company) SA www.samsmith.com
Wine Vintners Vic www.vintnersmerchants.com.au
Wine Dave Mullen Wine Agency WA
Wine Lionel Samson WA www.lionelsamsonandson.com.au
Wine/Beer Wines of Chile Pty Ltd NSW www.winesofchile.com.au
Wine/Beer Arquilla NSW/Vic www.arquilla.com
Wine/Beer Arquilla Vic www.arquilla.com
Oz North Food & Liquor Wholesalers Pty Ltd NT www.ozfcws.com.au
G&S Wasseige – Belgian Imports QLD
Australasian Imports Pty Ltd SA www.aimportg.com.au

9.       Promotion and Marketing

Support the distributor/retailer with social media, events, eNewsletter, marketing dollars, PR, point of sale, merchandise, in-store tastings, meet the brewer, dinners, festivals, samples, Buy 10 get 1 free, etc.

Join and support the industry associations (the retail association members are your prospective customers and helps you understand their challenges and opportunities). Some industry associations are: ALSA, CBIA, ARCBA, AHA, LMAA. Also see the retail associations for their member lists for retailer banner groups and retailers to target as sales prospects.

10.   Growing Pains/Customer Service – What contingencies are in place to cope with excess demand?

When the great thing happens of demand exceeding supply, what plans do you have for access to more capital for more fermenters and bright beer tanks. Rather than buying equipment, you could contract brew your excess demand. Don’t forget to go over all considerations for ensuring you don’t miss out on any sales and you can provide good customer service to existing and future customers.


 

By David Lipman, Founder Beer & Brewer Magazine and Drinks Hub.

Drinks_Hub

David Lipman Bio:

David’s passion for beer began in 2002 as a Cellarman at The Whitehorse on Parson’s Green and The Porterhouse Covent Garden, two institutions for great local and imported beer in London. In 2007 David founded Beer & Brewer magazine and www.beerandbrewer.com, and finished up as Publisher/Editor in May 2014. David has published as Editor-in-Chief five books on beer, including Ultimate Beer Guide Australia & NZ (2011), Craft Beer Trade Buyers Guide (2012), Breweries of Australia: A History 2nd Edn (2012), Best 100 Beers Australia (2013) and Beer Buyers’ Guide Australia & NZ (2013) www.beerbuyersguide.com.au. David has also published booklets on beer & food matching for Beer & Brewer magazine and BBQ School. David has launched three beer events including Beer & Brewer Expo (2009, Melbourne), Beer & Brewer Awards (2010, Sydney) and Beer & Brewer Conference (2012, Melbourne). These days David continues his passion hosting corporate tastings (including at the Sydney Opera House and Taste Festivals Australia). David has also just launched Drinks Hub, an exporter of Australian premium drinks, including craft beer, cider, spirits.

Looking For A Beer Importer in USA? Be Prepared For These 7 Questions.

Craft Beer Importers

Our recent interview with Jon Reynolds who has been working in the american beer industry for more than 30 years helps us craft the ‘The 7 most important questions that will help you find a US beer importer partner‘.

The Three Tier Distribution Model is a difficult system to navigate, especially for international brands new to the compliance restrictions and regulations present in each individual state. Finding the right importer whose company profile fit’s your brewery’s needs is the first step towards getting your beers into retail stores across the USA. This means developing strong sales pitches, support programs and freight networks so that your import partners can establish healthy relationships between your brand and their distribution and retail accounts.

Finding the right import partner and getting your international beers into stores across the USA.

1 – What are the most important steps and sales tools that the Australian brand owner could take before they begin importing and selling?

The Australian brand owner should prepare, at minimum, the following Marketing Presentation of their Imported beer brand:

  • Marketing Story
    Main points of difference vs. the competition already available on the market.
  • The Brewery and the Source
    Unique place, landmarks, water, minerals, elevation, country’s lifestyle, culture, tap room and unique hops and grains
  • Brand Portfolio
    Sell sheets, photos and packaging/SKU’s are very important.
  • Distribution Secured
    What countries, states and markets, annual sales plus excess capacity are available?
  • Brewing Awards Won
    Include a full list of Domestic and International Brewing Awards and Competitions.
  • Marketing support elements on all Media platforms
    Detail your, POS, website, video, social media (Facebook, Twitter, Instagram, Google, and Pinterest, etc.) sampling programs, trade samples, incentives, merchandising/display enhancers, and truck decals.
  • Sales support elements
    Outline all U.S. sales agents, tasting groups, media agencies, brand managers, and feet-on-street availble to support importer.
  • Samples
    Samples can be expensive if shipped from overseas, so the brand owner should attempt to get its importer in place before too many samples are sent FEDEX or DHL.

2 – What are the target price points for your Aussie beer brand?

  • First, research the market and develop an Aussie brand to target the U.S. market you are expanding into (East Coast, West Coast, Midwest).
  • Establish an F.O.B. in Australia that covers your full cost of goods and provides margin for your Brewery.
  • Estimated landed costs for containers into the U.S.; should include inland freight to Aussie Port, Export Duties, Sea Freight to the US. Port, Import Duties, Federal Excise Taxes, Importer Fees/Margin, Inland Freight to U.S. destination, State Excise Taxes, Distributor Margin (30% normal), Sales Rep Commission and Retailer Margin (25-30% normal).
  • This should lead the brand owner to Recommended PTR’s/PTC’s for each SKU.

Please find All 7 Questions You Will be Asked by US Beer Importers here: http://beveragetradenetwork.com/en/btn-academy/ready-to-export-your-craft-beer-to-usa-here-are-the-7-questions-you-will-be-asked-by-us-beer-importers–389.htm

If you are looking to export your craft beer brand to USA, we encourage you to attend US export conference on Sept 2. Check out the speakers here http://australiatradetasting.com/en/conference-26.htm

 

Australia Trade Tasting

Australian Brewery – National Pride and Canned Craft Beer

Australian_Brewery

Australia Trade Tasting Profiles Craft Beer exhibitor Australian Brewery.

Founded in 2010, Australian Brewery is a state of the art facility full of clean, sleek stainless steal.  The brew room is quite impressive and makes you wonder if it was built to reflect their dedication to canning, a signature characteristic of Australian Brewery.

Australian quickly gained market traction as their line-up of unique canned beers won multiple awards and their dedication to building a fan base of die-hard consumers won them support around the country. From it’s canning line to it’s front office, the brewery is purpose built to produce some of Australia’s choice beers and ciders.

We had the chance to talk with Australian Brewery owner Marcello Colisimo on the rapid rise of Australian Brewery and his plans for it’s future.

Why is it that Australian Brewery strictly cans their beer and cider line-up?

It was an easy decision really, as a craft Brewer you are always
looking for the ways to ensure your beer remains as fresh as possible
for as long as possible. I mean in an ideal world everybody would be
drinking straight from our tanks, but after extensive research the next
best option was to package in cans. Zero light (preventing UV light
breaking down the delicate flavours.) Less oxygen pickup during
packaging than bottles and no oxygen leaks once inside (unlike bottles.)
Not applicable to taste but important to us as a company is the
environmental benefit, cans are lighter so leave a smaller carbon
footprint and have a higher recycling rate than bottles. So all-in-all,
cans were an easy choice for protecting our award winning beers.

Tell us more about the Canbassador competition, what was the overall response from your audience?  It looks like you guys really boosted your brand recognition with the program.

Canbassador for us was about educating consumers on the benefits of
cans and connecting to a key target demographic of a young, creative,
socially engaged craft beer drinker. In a cluttered Australian craft
beer market it had an overwhelming response, converting casual drinkers
into passionate supporters of our beers and brand.

Australian Brewery takes part in a lot of local and national events.  What message do you guys try and get out into the world when you are exhibiting?

Part of being a micro – craft brewery is about getting in consumers
faces and having them taste our beers. We have one of the highest medal
rates of any brewery in the country with champions trophies, and many
best in class awards; including two this year for our Pale Ale (Best in
class Australian Pale Ale CBIA / AIBA.) So we know customers will love
it, we just need to let them taste it. And the easiest way of getting in
front of a lot of people at once is trade shows and exhibitions. It also
helps that consumers at these events are already engaged.

You also spend a lot of time doing tasting at retail accounts – what do you find works best building support in your distribution channels?

As a small producer we don’t have the ability to provide rebates to
lock in stockists and tap share like the big multi nationals. So we have
to get pretty creative with our accounts. Tastings are very important
and we run them weekly, but we also offer staff incentives etc. However
what works best, and what we love to do the most is to bring the venues
staff out to the Brewery for lunch, a brewery tour and of course beers
with our head brewer. This gives the staff the confidence to sell our
products. In our experience if the staff love it, they will pass that on
to consumers.

How are you planning on taking advantage of your presence at Australia Trade Tasting?

We have begun exporting our beers to Japan with quite a lot of success.

The next stage of our distribution is to take this further with an eye
to meet distributors for other Asian countries and America. We are also
looking to boost our national distribution in Australia. AuTT looks to
be a great place to connect with a variety of industry leaders in the
distribution game.

Australian Brewery has built a successful national brand over the course of a few years. As they continue to grow and build markets around the world, they will be spreading their passion for their namesake country.  They’ve put themselves in an exciting position to represent both Australia and craft beer together and are poised to be a bright spot in the industry for decades to come.

AuTT_Banner_Wine_MagAre you a beer distributor looking to source new and innovative Australian craft beers? Get Involved at Australia Trade Tasting.

In Depth Data Analysis on the Craft Beer Industry in Australia from David Lipman, Founder/Director of Drinks Hub

 David_Lipman_SpeakerDrinks_Hub

Australia Trade Tasting gets in-depth insight into the Australian Craft Beer and Cider Industry from David Lipman, Founder of Beer and Brewer Magazine and Drinks Hub.

The Craft Beer and Cider Industry has seen steady growth in Australia over the past decade.  With it’s increased popularity, more and more offerings are popping up as novice and pro brewers take their passion to the marketplace.  While excited consumers rejoice because of the extra options in bars and retail stores across the country, trade professionals question the industry’s capacity and wonder if the market is saturated.  We caught up with one of the industry’s leading professionals, David Lipman, to get his perspective.

Here is our Q & A with David and his interpretation of the most recent Australian craft beer and cider industry data available today.

What Craft trends are appearing in Australia? 

1. On-premise, premiumisation, drinking less, spending more
Barscan who report on around 3% of on-premise sales trends across Australia, said in the three months to March 2014, 45% of pubs in the BarScan sample set had a craft beer available on tap with the growth from the previous three months to December 2013 being 20%.

In the three months to October 2014 56% of pubs in the BarScan sample set had a craft beer available on tap with the growth from the three months to March 2014 being 24% (representing a 6-month growth period).

With this growing trend of craft beer on tap, Barscan says “Craft Beer is the fastest growing beer segment in pubs, largely due to the growth in taps, and being sold at a price premium”. March figures from BarScan reported Volume of beer in pubs was -2.2%, while value was +1.6%. Dramatically in the UK volumes were -6.5% year on year), interestingly in the USA volumes were +1% (over a 10 year period 2002-2012). Looking at share of draught beer versus total beer, in the USA draught is only 10% (cans being 65%), whereas in Australia and the UK it’s more like 48% draught.

I am seeing more venues open being dedicated (themed) to craft beer, more craft beer events such as Tap Takeovers, Festivals, Dinners and Meet the Brewer Tastings. Some craft beers are being packaged only in kegs, being exclusively available in pubs, so as to provide pubs a point of difference to the off-premise, and allowing brewers to collaborate with venues on recipe development (e.g. Bridge Road Brewers, Beechworth Vic). Also in pubs I see the growth of House Beers, where an individual pub will work with a brewer to produce their own brand of beer, with the style to meet their customer’s tastes and provide more margin to the pub. E.g. Opera Bar (Sydney NSW) Organic Ale by Redoak, NSW and Sail & Anchor Hotel (Fremantle WA) from Feral Brewing, WA. Pubs are also improving their food/bistro offering to pair with the diverse spectrum of flavour in craft beer, which is helping attract more customers and increase spend per customer.

Looking at growth in pubs having a craft beer and/or cider on tap, according to BarScan, craft beer is growing twice as fast as cider in pubs, with 24% growth for craft beer versus 12% for cider, in the three months to October 2014.

2. On-premise Consumer Insights, from Drinks Hub survey of Beer & Brewer magazine readership in March 2014

Consumers demand four different craft beer brands per month in pubs
That’s up to 50 different beers per year – if only one tap dedicated to craft, then it needs to be rotated weekly. According to Barscan, the average sell through of a keg of craft beer per week is 75% of a keg, which needs to be 100% to allow for one keg sold per week, to ensure beer freshness, quality and paying its way. Some specialty craft beer venues are selling 300-500 different beers per year.

80% want to try a new craft beer when they visit the pub
The challenge is only 33% of craft beer drinkers visit the pub weekly – therefore pubs need to offer at least two different craft beers per month to appease the craft beer drinkers’ repertoire and keep them coming back to their venue.
100% of respondents want craft beer on tap
At least one craft beer tap in every pub, as respondents are spread all over Australia. Venues have on average 8 taps, and if one needs to be craft beer, it’s up to the publican to ensure their tap contracts or suppliers have the selection to appease their customer’s current tastes and preferences and entice new customers with updates to the tap bank seasonally or by occasions.

60% want craft beer to be more affordable on-premise
Excise on beer packaged in kegs (49.5 litres) is 40% less than beer packaged in kegs or bottles (less than 49.5 litres). However with high labour costs and rent, craft beer on tap is too expensive in the eyes of 60% of respondents. Craft beer prices are competitive from the large brands; however it’s the smaller craft brands that are not able to be price competitive due to much smaller production volumes. The trend of consumers drinking less and spending more (on craft beer and premium imported brands), comes down to do the top 20-30 craft brands on-premise receiving most of the volume growth, as they have the tap space. It’s one thing for a small craft beer to gain a tap, however the higher wholesale price leads to the consumer paying more, drinking less, and then that tap not selling as much as other taps and making the publican need to try other craft beers, or essentially keep that tap rotating to appease the consumers that want to taste 2-4 different brands a month in pubs.

3. Limited retail space and the importance of distributor relationships
With 3,000 plus local and imported beers available in Australia, and retail space to accommodate these beers being limited in on-premise to on average eight taps and 30 bottles, and in off-premise 150 bottles, it means the market is highly competitive and retailers wanting to deal more and more with distributors that represent a portfolio of craft beer, rather than the individual brand owners themselves. Local breweries entering the wholesale market that need to hit around 1.5 million litres a year to generate decent profits, need to consider their distribution model to maximize volumes, be that via a distributor, wholesaler, direct via their own sales force, or direct with retailers. Brewpubs or cellar doors are of course a guaranteed distribution channel, albeit a high capital investment.

The strong Australian dollar and growth in consumer repertoire drinkers has greatly attributed to the high number of imported beers available in Australia, not to mention the ease of access from parallel importing.

themonktastingpaddle_5188

Is Cider going to continue to be a popular category in Australia?

IRI-Aztec, who are Australia’s leaders in off-premise sales stats, state on the popularity of the Cider category, “Whilst we are seeing volume declines in Total Liquor in the Australian off-premise we are still seeing value growth as shoppers consume less, but are willing to pay more. Cider continues to be the stand out with strong growth of the last few years. Although this growth is not as high as it has been it appears to be holding at a very healthy rate (double digit). In the last 12 months we have seen 11% value growth in the category. We have seen recently that volume growth has overtaken value growth as the key driver within Cider”.

BarScan, who lead the industry in on-premise sales stats in Australia, state that a pub is more likely to have a cider on tap than a craft beer. In the three months to March 2014, 67% of pubs in their sample set had a cider available on tap, compared to 45% for craft beer. Now in the three months to October 2014, 75% of pubs having a cider on tap. The trend here is showing cider is getting closer to 100% of venues having a cider on tap, and hence still a popular category in Australia.

Cider will continue its growth, however it should be mentioned that cider can take many forms, based in the amount of juice or concentrate used in the base cider, and as a generalization the huge growth in cider, particularly off-premise, is thanks to Rekordelig and the Swedish ciders. Given Barscan’s stats it appears cider may be slowing its growth, albeit off a large base.

2. Where do you see potential for budding craft companies?

Distribution
Local craft brewers and distributors of imported beers alike, may like to focus on non-traditional liquor retailers, such as restaurants, clubs and hotels – which represent a far bigger number of licensed venues (38,000 in NSW and Vic alone for example) compared to the traditional liquor store or hotel licenses, with approx. 23,000 across Australia.

I believe craft brewers should focus on restaurants, as their beer lists are small, meaning the chances of getting picked are much better than in a bottleshop or pub, plus once you’re on the list, and the beer is selling each week, why would the restaurant change? More chefs and sommeliers are realizing that beer has a much broader spectrum of flavour than wine, and hence is an excellent match to any food on any menu, be that to complement, cleanse or contrast the food flavours.

Alternative routes to market for craft brewers are standalone draught beer systems that can operate on bars, in function rooms, and so on. These also work for non-traditional liquor outlets such as cafes and restaurants that done have any taps installed, nor the space or budget.

It’s interesting also the new Dan Murphy’s connections online platform that allows suppliers to sell their complete portfolio, rather than only what Dan’s could fit on the physical store floor. Drop shipping is a scenario many online retailers offer to share the risk of retail sales with suppliers.

Styles of beer and packaging
As at July 2014 sales data, IRI-Aztec, who gain sales data from most independent and banner group off-premise retailers nationally, say, “we are seeing Mid-strength, Premium Imported brands and Craft the real drivers of growth in Beer with the other segments in decline”. “We have seen a number of new multipack SKUs being introduced recently ncluding 10, 12 and 18 packs. It is very early days, so we don’t have any reliable performance information, however consumers are becoming more and more driven by convenience and occasion based purchasing, which would suggest an opportunity for new pack formats that cater to this”.

Diversifying
There is a trend of craft brewers branching out to craft distilling, plus distillers not just focusing on whisky or gin, or vodka, but producing all three. If it’s hard enough maintaining retailer relationships and distribution, then craft brewers look at offering their loyal customers another craft product from their company. E.g. Young Henrys in Newtown NSW.

Social Media, Online Marketing
Doing the online basics well is very cost effective for budding craft companies – such as having the social media handles as the same name as the brand across all the social media channels, ensuring the brand has a regular eNewsletter and/or blog, plus keeps their web site up to date with events, new releases and awards. Some venues have an App when and what new beer is going on tap, when bottled beer menu changes, events dates, etc. which is excellent marketing. E.g. The Wheatsheaf Hotel in Adelaide SA.

cropped-Australia_tastings_home_0922-1.jpg

Is there encouraging data in on-premise channels, tastings, etc.?

Yes there is very encouraging sales data in on-premise, as mentioned above. However there may be only 20-30 brands that see the sales from this data.

Yes tastings are the way to build a brand, and have a direct positive impact on sales. Dan Murphy’s seem to be the champions of in-store tastings, and while previously brands were said to be built on-premise, it’s now a case of any venue, either on- or off-premise that engages new customers with products via tastings, will see a positive impact on brand awareness and sales.

3. Is Craft Beer finding new retail homes easily as competition increases with the number of brewery offerings continuing to grow?

Australia is already saturated with 200 breweries (approximately 290 beer brands), from a per capita perspective, compared to 3000 breweries in the USA for example. This number isn’t too high, however when imports are factored in, as mentioned previously, the number of beers grows to 3,000+, making the competition fierce and the ability for individual brands to grow very challenging.

As mentioned above, given craft beer on tap in pubs is growing at 24% during the three months to October 2014, it may seem craft beer is finding new homes easily, however I believe this is very much only enjoyed by the top 20-30 selling craft beers, given most pubs only have eight taps, these beer brands have the ability to supply large volumes at competitive prices and are willing to promote their products with pubs (i.e. offer contracts, rebates, equipment, point of sale, promotional dollars, etc.). I believe craft beer as a generalization for all sizes of craft brewers are finding new retail homes in pubs relatively easy in selling 1-2 kegs, or a pallet of kegs for one month on a guest tap. The problem is once that keg sells or that month is over, the brewer loses that tap and they are left needing to find another venue, meaning growing draught beer volumes is very difficult.

Specialty Beer off-premise venues are proving great retail homes for craft beer, from large fridge space, growlers and events, such as Warners at the Bay (NSW), Plonk (ACT) and Mane Liquor (WA) however these are few and far between when you pool them with the 9,000 off-premise shops nationally.

There is a lot going for imported beer in Australia, given the economies of scale, and consumer willingness to pay more for international beer.

Imported beer in Australia is a good profit margin for importers and distributors; given the average retail (off-premise, looking at random online retail prices for an 8 litre carton of craft beer) price incl. GST for international craft beer of $74 is 13% higher than local craft beer at $64.50. Importers are buying imported craft beer at an average $17.50 (Drinks Hub wholesaler research) per carton (24x330mL) when the average ex-works local craft beer carton is approximately $30 ex excise, representing imported craft beer as a 42% saving. When you add the International craft retail price premium of 13% (approx. $6.50) to the 42% wholesale price saving (approx. $12.50), that means distributors of imported craft beers are approx. $19 per carton better off, not taking into account customs, warehousing and freight, etc. costs.

Craft_Beer_data_Australia

Given Australia is only 1% of global beer consumption, local craft brewers will never be able to compete with imported craft beer as imported beer being brewed in the USA, Asia and the EU/UK is able to be brewed at much larger annual volumes to gain brewing efficiencies where the cost per carton will always be better than local craft beer wholesale prices. And it doesn’t cost much to freight beer ambient around the world. The largest fixed cost apart from the liquid, for local brewers in Australia is excise (it’s drastically less in the USA for example).

If Government excise on craft brewers in Australia wasn’t so high, it would help local craft brewers’ profit margins and ideally they pass on those savings to retailers, thereby becoming more price competitive (if they scale down their wholesale prices that is) – then as volumes grow, the local craft brewer gains brewing efficiencies and perhaps the Government charges a higher rate of excise. The flip side is, this may encourage even more entrants to the local brewing scene, and craft brewers don’t pass on the savings in excise.

Australia is already saturated with breweries per capita, when compared to the USA. We need the existing beer brands selling more, so they are more sustainable, and if more price competitive to imports this will help, particularly when 60% of consumers from the Drinks Hub research of Beer & Brewer magazine readers in March 2014 want craft beer to be more affordable at the pub.

This case study justifies why so many small craft brewers and associations in Australia lobby the Government for excise tax reform. It comes down to will the Government ever see a net benefit from excise tax reform? Surely there can be, just like income tax-free thresholds, why not have a volumetric tax system based on annual production volumes with rebates (more like $300,000 not the current $30,000) for local brewers (and free trade agreement country members)?

I strongly advise budding entrants to the craft beer space to do their due diligence in business planning on deciding on the retail or wholesale market for sales. If wholesale to budget in tough competition from tap contracts, parallel importing, high excise and the growing retail liquor home brands, all competing for shelf space.

4. What resources do breweries that are looking to export have at their disposal?

Brewers have Government agencies Austrade and DFAT, and brewing associations (ARCBA and CBIA) as industry resources to help them with preparations for export and join in Embassy and Trade tastings/shows abroad. I have recently launched Drinks Hub, which is an Exporter of Australian Premium Drinks, being craft beer, cider, gin, whisky, wine sachets.

It’s important to mention that many Australian beer brands have tried/dabbled in export, and don’t seem to pursue it, as the initial orders don’t turn into repeat orders – mainly due to price as mentioned above. I recommend only largely produced craft beers consider exporting as they can be most price competitive and gain enough volume to fill up containers and make it worth their while. Drinks Hub can help brands export who don’t plan on exporting a great deal, or large craft brands export and assist growing their local brewing volumes to improve local wholesale pricing and profit margins.

5. Where do you see the craft industry in five years?

With distribution growing on- and off-premise giving consumers access to more craft beer and consumer tastes being more and more educated, the craft beer industry in Australia in five years will be higher than what it is today, and if I take a guess I think approx. 6% of total volume (or at least value). I hope in five years every pub in Australia has at least one craft beer available on tap (guest/rotating or regular), as craft beer drinkers are all over regional and metro Australia and pubs wouldn’t want to be alienating prospective customers. I hope the number of local beer brands stays around 300, so that the increase in volume benefits the existing, and allows them to be more price competitive and profitable.

Many of the Australian Whisky brands cannot keep up with demand both locally and export, and therefore with the growth in craft distilling, I see a lot of excess demand being available for these new entrants as the existing brands struggle to fulfill existing demand.

—————————————————

David Lipman, Bio

David’s passion for beer began in 2002 as a Cellarman at The Whitehorse on Parson’s Green and The Porterhouse Covent Garden, two institutions for great local and imported beer in London. In 2007 David founded Beer & Brewer magazine and www.beerandbrewer.com, and finished up as Publisher/Editor in May 2014. David has published as Editor-in-Chief five books on beer, including Ultimate Beer Guide Australia & NZ (2011), Craft Beer Trade Buyers Guide (2012), Breweries of Australia: A History 2nd Edn (2012), Best 100 Beers Australia (2013) and Beer Buyers’ Guide Australia & NZ (2013) www.beerbuyersguide.com.au. David has also published booklets on beer & food matching for Beer & Brewer magazine and BBQ School. David has launched three beer events including Beer & Brewer Expo (2009, Melbourne), Beer & Brewer Awards (2010, Sydney) and Beer & Brewer Conference (2012, Melbourne). These days David continues his passion hosting corporate tastings (including at the Sydney Opera House and Taste Festivals Australia). David has also just launched Drinks Hub, an exporter of Australian premium drinks, including craft beer, cider, spirits.

AuTT-WBM_620x200

Are you a craft beer or cider brand looking to expand your distribution and grow brand recognition?  Get involved and network with top industry buyers and media  at Australia Trade Tasting.