WHY IT MATTERS

When asked about the 20% figure, which is lower than the 25% figure used by the U.S. BA, McNamara says under the Corporations Act in Australia, 20% is considered material ownership. After consulting with lawyers, they decided this would be the most suitable benchmark for the market.

Prominent Australian “craft” breweries such as Malt Shovel/James Squire (Kirin), Little Creatures (Kirin), and Mountain Goat (Asahi) are all now excluded from the industry body. The other stipulation, which is unchanged from previous rules, limits members to less than 40 million liters per year (the U.S. BA limit equates to 180 million liters, or 4.5 times that size).

When they first announced they were looking at changes, CBIA co-founder and director of Malt Shovel Brewery Chuck Hahn said in a statement:

“There is a part of the industry that seems intent on defining itself not in terms of what’s great about craft – the quality beers, the passionate brewers and the characters behind them – but in terms of who owns what.”

McNamara says when that statement was released, the way forward was still undecided and the Association never intended to make it about quality or passion. He says it’s about ownership and ability to influence the beer market.

“There was concern from a lot of people in the bigger breweries that we were going to come out and define craft beer and say ‘you aren’t craft beer’ and make commentary about their brewing practices and their product,” he tells GBH.

IBA chair Peta Fielding says that, ultimately, decisions about who is a craft brewery or not are “up to the consumer." She further adds: “This association is about a way to bring together the companies within the industry that need the benefit of a group to be able to achieve certain things. There are those that need it, and there are those that don’t.”

The wording and 20% figure may result in some interesting scenarios. One such example involves Brooklyn Brewery, of which Kirin owns a 24.5% stake. Should Brooklyn purchase more than 20% of an Australian brewery, the purchased brewery would no longer be considered independent by the association. Brooklyn currently brews beer under a licensing agreement at Cooper’s Brewery in South Australia. Coopers, even though completely family-owned, are over the 40 million liter limit.

This new rubric will also include private equity, which would include companies such as TSG, who recently acquired a 22% stake in BrewDog and have a partnership stake in Pabst Blue Ribbon. Should they take a similar stake in an Australian brewery, that brewery will also lose their independence per the IBA. Even in the U.S., the question has yet to shift from simple corporate brewery ownership "buyouts" to private equity, which would include Oskar Blues and Cigar City, Victory and Southern Tier, SweetWater, Uinta, and Dogfish Head (who sold only 15%), and many others.



Independence as defined by Australia's craft brewers may just be a critical marker for the future value of that definition, providing a line that's much harder to blur than "craft" or "indie" as it's defined by the U.S. breweries who are clever to keep their percentages and financial sources just within the still-broad limits of the association, but which many consumers wouldn't necessarily agree with.

Locally, a case study is the Australian Beer Company, who brew “Yenda” beers in Australia. A joint partnership between Coca Cola Amatil and Casella Family Brands (the team behind Yellow Tail Wines) are excluded due to their ownership of Paradise Beverages (Fiji Bitter). Should they ever sell, they may then be eligible to be independent again, despite involvement of large wine and beverage companies.

Fielding says they knew there would always be some messy areas that came with the new direction, but they needed to draw a line in the sand.

“Obviously you can't decide that anyone’s money is better or worse than anyone else's money," she tells GBH. "That’s not really the issue. If you’ve got a lot of money behind you, but no real extreme market presence and access, then you've got to go through all the same steps all the little guys have to go through to break down the barriers.”

One such barrier is tap contracts. There are currently no laws around buying and incentivizing taps, and major brewers CUB (AB InBev) and Lion Co (Kirin) command a lot of real estate in this space. The issue is currently under investigation from the Australian Competition and Consumer Council. However, that investigation has been running since 2014 with no completion date.

Add on to that the number of large international craft brands, including Sierra Nevada, Goose Island, Ballast Point, Blue Moon, and Firestone Walker all making their presence felt at Melbourne’s annual Good Beer Week last week. It does look as though there will be a long struggle for the little guys yet.

—Luke Robertson