Breweries are expected to look for new flavours and innovative products to continue craft beer’s appeal to consumers seeking a unique brew.
Overall beer consumption will continue its decline, with wine and cider to be the fastest-growing liquor segments over the next five years, industry analysts IBISWorld predict.
But IBISWorld believes craft beer will follow closely on wine and cider’s heels.
It expects craft beer producers to try to offset the threat posed by rising wine and cider consumption through innovative offerings and niche products such as Belgian, French and German-style craft beers.
New varieties of craft beer are expected to drive increased demand, particularly specialty European styles such as saisons, an IBISWorld research report says.
“Beer drinkers are expected to place greater value on craft beers with a regional focus produced in small, seasonal batches, as opposed to easily obtainable mass-produced beers,” it says.
Craft and fruit-infused beer are tipped to demonstrate the strongest growth while foreign brands will also make increasing inroads into the market.
IBISWorld senior industry analyst Ryan Lin says craft beer offerings may become even more niche.
“I believe that as consumer tastes continue to develop, a lot more premium and dietary characteristics of the products would be very important for the industry players to really capture.”
The range of low- to full-strength and low carb beers offered in mainstream beers could also be reflected in the craft segment, he says.
“Craft beer is essentially founded upon the fact that it is unique and it is different.
“Our big players, once a lot of the craft beer aspect of things become a lot more saturated in the industry, they may look towards new flavours, different ways of brewing beer, in order to attract the demand – a more different product than before.”
IBISWorld says the line between craft and mass-produced beers is slowly blurring as the industry’s largest players increasingly turn to craft beers.
“It is therefore important for craft beer producers to maintain branding that appeals to their customers, at the risk of losing their credibility among an increasingly discerning target market.”
At the same time the major supermarket players Woolworths and Coles – which account for more than half of all liquor sales in Australia – are tipped to expand their own private label offerings.
“They’re pitching these private label craft beers as being small, unique and something different for consumers that is accessible via their liquor stores as well,” Mr Lin says.
AUSTRALIA’S BOOMING CRAFT BEER INDUSTRY
* Makes up 3.5 pct of overall beer manufacturing industry
* 10.1 pct annual revenue growth in five years through 2015/16 to $178.6 mln
* 6.3 pct annual growth forecast five years through 2020/21 to $242.9 mln
* Slower forecast growth in part due to competition from big players
* Broader range of craft beer products expected, including private label
OVERALL BEER INDUSTRY
* Per capita beer consumption down more than 15 pct over past decade
* Fell from 4.7 to 4.0 litres (a year) between 2008/09-2012/13 (latest ABS figures)
* Expected to continue declining
* $4.8 bln revenue (0.1 pct annual growth last five years)
* 1.7 pct annual growth forecast next five years to $5.2 bln
* Shift towards higher value products to drive growth next five years
* Traditional brands forecast to lose market share to premium beers (including flavoured, dry, foreign-label and craft brands)
* Consumers switching to wine or cider KEY INDUSTRY PLAYERS LION
* Australia’s largest beer manufacturer
* Largest craft player after 2012 acquisition of Little World Beverages
* Market share 33.3 pct
* Industry brand names: Little Creatures, White Rabbit, James Squire, Knappstein, Kosciuszko Pale Ale, Bare Cove Radler
* Acquired Matilda Bay
* Market share 17.6 pct
* Industry brand names: Matilda Bay Brewing Company, Redback, Beez Neez, Fat Yak, Bohemian Pilsner, Helga, Alpha Pale Ale, Dogbolter
* Number of industry operators growing, especially smaller breweries focusing on niche markets
* About 150 craft breweries
* Majority based in Victoria and Western Australia SUPERMARKETS
* Coles and Woolworths account for almost 60 pct of total liquor industry revenue
* Their push into private-label beer and liquor expected to grow COCA-COLA AMATIL
* Back in craft beer market * Joint venture with winemaker Casella
VARIETY OF CRAFT BEERS ON OFFER
* Pale ale most popular variety – India pale ale, amber ale, American pale ale dominate craft beer production industry – Nearly all industry players brew some type of pale ale – Ale accounts for 59.6 pct of industry revenue
* Pale lagers most common variety in overall beer manufacturing industry – Nearly all best-selling beer brands (XXXX, Victoria Bitter, Carlton Draught) are lagers – Craft brewers’ range of lagers include James Squire’s Sundown Lager, Knappstein Reserve Lager – Lager accounts for 30.7 pct of craft beer revenue
* Stouts account for 4.2 pct of industry revenue
* Wheat beers account for 5.5 pct of industry revenue – Popularised by Matilda Bay’s Redback; number of craft brewers introduced own wheat beers brewed in traditional German style – Industry’s major players have at least one line of wheat beer
PREMIUMISATION WITHIN CRAFT BEER MARKET
* Producers segmenting produce along quality and price lines
* Brands such as Tasmania’s Moo Brew and Lion’s Knappstein positioned at upper end
* Mountain Goat and James Squire marketed as medium-price craft beers
* Some of industry’s oldest players such as Redback, Little Creatures and Fat Yak positioned at lower end of price scale