E-Malt.com News article: Australia: Brewers to seriously increase beer prices

Traditional Aussie beer drinkers are being hit with massive price rises on their favourite local brews so brewing companies can subsidise imported boutique ales, media learned from Daily Telegraph July 22.

New research shows the big liquor companies have dished out huge price increases for mainstream beers like VB, Carlton Draught and Tooheys in recent years. At the same time the price at the top end of town - Corona, Beck's, Heineken and Stella Artois - dropped markedly.

Liquor retailers accused July 21 big brewers Foster's and Lion Nathan of inflating ordinary beer prices to make up for narrowing margins in the boutique/premium market.

"I suspect they probably are. We suspect that it's true," one senior industry insider said. "We just don't have the evidence."

But a report from investment bank Credit Suisse First Boston gives that evidence. It says Foster's charged up to 7.5 per cent more for a case of beer in each of the past three years - double the rate of inflation. While VB cost less than $30 a case in 2004, it now sells for about $37.50 (all figures in AUD). Carlton Draught and Tooheys New are following similar patterns.

"Over the past five years ... Foster's Group and Lion Nathan have experienced exceptional price growth," the report said. "We continue to expect list price increases for these brands."

Prices for Heineken, Stella, Corona and Becks were continuing to fall, the report said.

Industry sources said the mainstream price rises started when small "parallel importers" entered the market, forcing the big brewers into a David and Goliath price war. While the big companies licence their import brands and brew them in Australia, parallel importers simply buy cheaply from the source and sell cheaply in Australia.

"There's no doubt the wholesale prices of local beers ... have jumped inordinately in the past 18 months to two years," one major Sydney independent retailer said. “At the same time your Coronas and Heinekens have gone from around $70 (a case) to frequently less than $50. The big breweries will say there's no relation between the two, but what do you reckon? Either way it's good for premium beer consumers and bad for the blokes who prefer VB."

Foster's, which owns VB and Carlton Draught, and Lion Nathan (Tooheys) denied there was a link - or even a price war. Asked if VB drinkers were being forced to subsidise Stella Artois drinkers, a Foster's spokeswoman said: "That would be like robbing Peter to pay Paul."

A Lion Nathan spokesman said there was nothing unusual in wholesale pricing.

How the bottle shop price stacks up

Foster's mainstream beers
VB: Now $37.50 a case, could reach $40.30
Carlton Draught: Now $38, could reach $40.85

Foster's premium beers
Corona Extra: $61 and falling
Stella Artois: $49 and falling

Lion Nathan mainstream
Tooheys New: $35, could reach $37.60
XXXX: $35, could reach $37.60

Lion Nathan premium
Heineken: $42 and falling
Becks: $47 and falling



26 July, 2006