May 28th 2024.
In the bustling city of Sydney's Inner West, a small pub proudly displays a sign that stands up against the big multinational beer companies. It's a quiet but powerful statement, a call for the smaller independent breweries to be given a fair chance in the industry.
Australia's craft beer scene has seen a huge surge in popularity over the recent years. However, the market is heavily concentrated, making it difficult for the smaller independent breweries to stay afloat. With high taxes on beer production and the added challenges brought on by the COVID-19 pandemic, many independent producers have been forced to shut down.
To make matters worse, the industry is dominated by two big players - CUB and Lion - who together hold a staggering 80% of the market share. It's an unfair and unequal situation, and it's causing a ripple effect that affects not only the independent breweries but also the consumers.
In response to this issue, the Newtown pub, Kelly's On King, has decided to take a stand. They have ended their corporate brewery agreement with Carlton & United Breweries (CUB), one of the major players in the industry. The licensee, Brodie Parish, explained that the deal with CUB gave them a $75 discount per keg in exchange for 60% of their tap space. This may seem like a good deal, but it came at a cost - the exclusion of independent producers.
Parish further explained that the kegs from CUB's popular brands like VB, Carlton Draught, and Resch's were priced at around $330 to $340 each. With the discount, it brought the price down to the high $200 mark. However, independent producers typically sell their kegs for only $240 to $270. This huge price difference puts them at a disadvantage and limits their access to the market.
Kelly's On King approached CUB and offered to give them 30% of their taps if they could make their keg prices more competitive with other producers. However, CUB rejected this offer and insisted on having at least 50% of the taps. This led to Kelly's On King's decision to terminate their agreement with CUB.
Parish, who has been in the pub industry for 25 years, has seen a rise in aggressive tactics from bigger breweries in the last five years. They are trying to reclaim the market share they have lost to independent producers. However, not many venues are willing to speak out against this issue, as it may harm their relationships with these big companies. Kelly's On King, being an independent-focused venue, has taken a brave stance in making a stand against this unfair practice.
In 2017, the ACCC (Australian Competition and Consumer Commission) launched an investigation into beer tap contracts following complaints from craft breweries about being locked out of pubs. However, they did not take any enforcement action. Parish believes that the ACCC should have gone further with their investigation and reviewed the agreements between the big companies and the venues.
In response to Kelly's On King's decision, a spokesperson from CUB stated that they respect the pub's autonomy in choosing what beers to serve. They also mentioned that they are happy to see competition from other breweries offering different beers. However, Parish believes that there should be a wider inquiry into these agreements and further investigation by the ACCC.
Kelly's On King's bold move has sparked a conversation about the dominance of big companies in the beer industry and the need for fair competition. While it may have some drawbacks for the pub, they remain committed to their beliefs and their focus on supporting independent breweries.
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