Walk into a bottleshop owned by one of the country's majorretailers and the shelves are likely to be stocked with more craft beer than ever before. But it's not just offerings from indie brewers or the homegrown and acquiredcraft brands of the big brewers filling the shelves and fridges –the range ofbeers brewed exclusively for the supermarket chainshas been growing steadily too.
Craft beer brewed for supermarkets isn’t new – indeed, Gage Roads was a quarter-owned by Woolworths until 2016 and our Ownership Infographics have featured the likes of Sail &Anchor, Steamrail, John Boston, 3 Pub Circus, and more over the years.
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But it's an area of their business upon whichColes and the Endeavour Drinks Group – now de-merged from Woolworths but still owner of the ALH Group of 300-plus venues, Dan Murphy's, BWS and Jimmy Brings –have been training ever greater focus.
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Coles Liquor has been pushing the Tinnies range, which has been collecting trophies along the way, alongside longstanding brands likeLorry Boys. Within Endeavour, the Pinnacle Drinks range includes a rapidly-expanding lineup of craft beer brands.
Joining Pinnacle's craftier offerings over the past couple of years have been Culture House (sours), Zytho Brewing, Initial Brewing, Colossal Brewing, Algorithm Brewing, Gogo Fish and, most recently, Crony.While there have been a couple of stouts released under the Zytho label, for the most part the brands are home to hop forward beers – pales and IPAs typically of a traditional American leaning– although Gogo Fish comes with a quirkier hop selection.
There's even the fundraising Hughie Beer, which raises money for farmers through GIVIT, and Stubbie, both of which sit closer to Coles' expansive Smithy's range of more traditional, throwback Aussie beers aimed at more mainstream drinkers. Endeavour have recently started promoting a lineup of imported lagers available exclusively through their storestoo.
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It's a pretty broad selection, with the new arrivals of the past couple of years coming incans designed so they wouldn't look out of place in the fridges of an independent retailer. Certainly, there's more homebrand beers on shelves nowthan most of the brewery owners we've spoken to realised, and we've seen some pretty sharp pricing too: on a recent visit to a localLiquorland, Lorry Boys Pacific Ale wasgoing for $10 a four-pack;Dan Murphy's members were able to snap uptwo cases of Stubbie for $76 not long ago.
At a time when both Coles Liquor and Endeavour have been pushing their support for small, local and indie brewers – see last year’s Local Luvva campaign from BWS, the new South Melbourne Dan Murphy’s
Which ranges around 450 cold beers of which around a third are Victorian, or the way Coles have been reworking many of their First Choice stores – it raises some interesting questions.
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How does a greater focus on developing and promoting their own brands fit with supporting local? While these lines of typically very well made, approachable – and, in some cases, trophy-winning –beers puts money in the pockets of their partner brewers, such as Tribe, Brick Lane and Gage Roads, do they make it harder for other independents to cut through and compete? Or are such brands merely another piece in the ever more complex puzzle that is craft beer today?
Looking at it more broadly, like a can of tomatoes or a box ofcereal produced under license, are they homebrand craft, gateway beers, or something else? While the small print on their labels states they're brewed or crafted for Pinnacle Drinks or Liquorland, for example, are consumers actually looking that closely? If they are, do they know what Pinnacle Drinks means in terms of where their dollars are going? And, if so, do they care?
Diarmaid O’Mordha is group quality assurance and sustainability manager at Endeavour, who we've previously spoken to forthis story on beer quality.Before taking on his current role, Diarmaid oversaw quality at Pinnacle Drinks for close to four years, and says comparing the Pinnacle he was directly involved in to today's version, particularly in regard to craft, is chalk and cheese.
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“I’m a bit jealous actually of the beers they’re now knocking out, ” he says, pointing to the size of the rangeunder the one banner.
“The evolution of Pinnacle has been quite amazing. Today, you could actually section off Pinnacle, pick it up, and it would be a major competitor to other suppliers.”
As for why they create and develop their own brands, Diarmaid says the process of having more control over each level of the supply chain helps to deliver better margins, adding:“If you’re actually in control of the supply further down, then you can get better return on your costs.”
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When we spoke, the group’s biggest sellers were those that more closely resemble beer from the world’s largest beer companies: the top three were Hollandia, Steersman and TUN. For those that more closely resemble craft brands, John Boston was the group’s largest by volume, although the Tribe-brewed Zytho range is on track to take its mantle.
Diarmaid believes the growth of Pinnacle’s own craft brands reflects the group’s wider embrace of the craft beer industry and the inclusion of more local breweries within its network of stores.
“[Craft is] a category to us that’s had amazing growth trajectory and has been a great success for our business as a whole, ” he says, claiming they see no risk that stocking a wide range oftheir own brands comes at the expense ofthose from externalsuppliers.
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“It has to be done from a position where we’re there to support it and gain share in an area that’s not taking away from other suppliers we’re working with, ” he says, describing the Pinnacle range as appealingmore to people who are price-conscious or looking for more entry-level craft brands.
“We don’t play in that high-end category at all – you’re not going to be paying $15 a can for any of our products, ” he says.
Paul Bowker, managing director at Brick Lane, which brews the Tinnies range for Coles, believes it’s natural for large retailers to look for better margins through vertical integration.
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“It shouldn’t be a surprise to anyone that it’s an area of growth that both Coles and Endeavour have identified, ” he says. “Particularly over the last couple of years, it looks like it’s accelerating considerably.”
At Brick Lane, they make a substantial amount of beer for others – not just Tinnies but other brands for drinks businesses large and small – with close to a third of their outputcurrently their own beers.
As a business at which brewing for others is built into their model, Brick Lane arguably benefits from the increase in private label beer.That said, Paul believes there are benefits for the wider beer industry, including independents, that comes from the increased care and attention Coles and Endeavour are paying to the craft beer market.He points to the fact that together they supply around 70 percent of alcoholic drinksto Aussie consumers, so, if the supermarket chains do craft styles well, it might attract more drinkers to explore further.
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“If the consumer is having a very good experience with a particular beer, then they’re more likely to shop widerwithin that category and then to adjacent categories to try other beers.Hopefully, one feeds the other and that’s an ideal outcome for beer as a whole.”
As for the impact of supermarketbrands on beers from brewing companies, Paul says it depends on a brewery’s wider strategy. For some, their focus is on selling their own beer directly, whether through their own venue or direct online retail.
“Within local and regional, there’s huge opportunity and huge growth still, he says, and the impact of national retailers with their own brands shouldn’t really impact those businesses and their future.”
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Where the impact is more likely to be felt, he believes, is at the bigger breweries with national reach, or thosewith ambitions to sell their beer nationally through the majorretailers.
“If that ranging is fundamental to your business model then that means you are competing pretty hard with the supermarket-owned brands that are usually national as well, ” he says.
One independent brewer who's beenworking with Dan Murphy’s longer, and in a more involved manner, than most of his peers is Ben Kraus. Thefounder of the fiercely independent, family-owned Bridge Road Brewers, says they're nowworking with Coles Liquor more than at any time in the past too.
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Over the years, they have created versions of the Bridge Road Advent Calendar in partnership with Dan Murphy’s and, while the brewery has a long pedigree when it comes toworking with independent retailers on exclusive releases, Ben says they can’t match the reach and audience offered by the majors.
Looking at the growing range of private labelbeers, he suggests the focus in this areais driven more by dealings with the country's biggest brewers than the independent sector whose beers their craftier ranges ape.
“One can only assume that it’s about continuing to apply pressure to those major suppliers – to have the upper hand dealing with the two major brewers, ” he says of the decision to work with the likes of Tribe, Gage Roads and Brick Lane. “Otherwise they’d get CUB to make these beers