Small Breweries in Australia
Brett Stubbs
Brett Stubbs from Southern Cross University asks if there is a future for small breweries in Australia and provides some lessons from history.
The words most often quoted to justify the study of history are probably those of the American philosopher George Santayana (1863-1952) who said that, "Those who cannot remember the past are condemned to repeat it." This is usually interpreted to mean that those who are aware of the mistakes and failures of the past are less likely to make them again. An alternative interpretation is that history can demonstrate what is possible. In other words, besides revealing dangers and limitations, it can also suggest safe pathways forward. Even with the benefit of historical knowledge, however, predicting the future is at best a hazardous activity. Nevertheless, I would like to draw from the history of beer in Australia some lessons that might be relevant to small brewers in this country today.
The history of beer in Australia for most of the last 120 years has been one of the gradual concentration of production in a diminishing number of plants and companies. This is clearly evident in Victoria, where the number of breweries declined steadily from 126 in 1872 to only 9 in 1927. The main cause of the decline was the growth of large capital city breweries. They utilised the railway networks to expand their markets. They filtered, artificially carbonated, and pasteurised their beer so it could withstand transport over long distances, they tied pubs in country areas so they would have exclusive outlets for their products, and they used the profits generated by their large and therefore low-cost city operations to subsidise the cost of marketing their beer at a distance. Gradually, the city brewers eliminated most of their small country competitors. So the decline in brewery numbers has a spatial dimension; brewing changed from being a highly decentralised industry to one that was centralised in the capital cities.
The trend toward industrial concentration, which was virtually complete at state level by the 1930s, resumed after the 1970s at a national scale. The historical state beer markets were reformed into what now is more or less a single national beer market in Australia. In short, the natural state of the modern brewing industry is a highly concentrated one. Economies of scale have created a major obstacle to the success of small breweries.
The boom in new breweries that has occurred across this country since the mid-1980s seems to have reversed this trend. However, of the 103 new breweries opened in Australia since 1984 only 59 are still in operation. This is not a great success rate. In addition, the big brewers have become involved in running new small breweries and in the establishment of new pub breweries. Another related tactic of the big breweries is the production of small runs of special or seasonal beers. These tactics are tending to cut ground from under the small independent breweries by accommodating the consumer demands that give rise to the small independent breweries in the first place.
Despite all of this, I believe there is a future for small breweries in Australia, and opportunities exist for ensuring their future. Many beer-drinking countries around the world have excise systems that discriminate between large and small producers. In the United States especially small breweries have flourished over the last 15 years under such a system. In 2002 there were 1363 microbreweries and brewpubs in the USA. I believe it is worth fighting for a system of excise concessions for small breweries in Australia. Extracting excise concessions from the Federal Government is unlikely to be easy, but some encouragement comes from three rare historical examples of favourable government treatment of beer in this country.
First, a government brewery was set up in Sydney in 1802 in an attempt to bring beer into more general use in the community in order to lessen the excessive and unhealthy consumption of spirits.
Second, in 1892 when the Victorian government imposed an excise on beer, it imposed a lower rate on beer made only from barley-malt and hops. The purpose of this policy was to encourage the consumption of all-malt beers that were considered healthier than the commonly consumed sugar beers. This distinction between all-malt and malt-and-sugar beers continued in the Commonwealth excise act in 1901 and remained until 1918.
Finally, prior to 1973 home brewing was effectively illegal in Australia, effectively because it had to contain less than 1.15% alcohol by volume to avoid the payment of license and excise fees. In 1973 the federal parliament passed changes to the Excise Tariff Act that exempted home-brewed beer of all strengths from the payment of excise, provided it was for private consumption. Notably, this legalisation drew the protests of the big brewers at the time.
The official encouragement of small-scale craft breweries through excise relief is a logical and overdue extension of the legalisation on home brewing that occurred thirty years ago.
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