IBA launches scathing attack on competition in the beer market

The Independent Brewers Association criticized the Australian beer market as one of the smallest in the world in its submission to the ACCC regarding the sale of Stone & Wood.

The ACCC called for bids on the takeover and its impact on competition in the beer market after the deal was announced last month, sending shockwaves through the industry.

In her brief, IBA Managing Director Kylie Lethbridge highlighted the oligopoly that dominates the Australian beer market and the resulting challenges for small independent businesses to access major distribution channels and respond to customer demand.

Lethbridge argued that the stranglehold that Carlton & United Breweries, owned by Asahi and Lion, owned by Kirin, have in the market has only been compounded by another major player, that of Endeavor Group.

The newly listed company focused on private labels, often mimicking existing styles and branding.

According to the IBA, Fermentum Pty Ltd represents around 20 percent of the independent beer market by volume, and therefore removing it from the pool of small independent brands will only exacerbate the oligopoly.

The IBA has also launched a scathing review of the ACCC’s past beer actions, including its relatively uncritical acceptance of Asahi’s takeover of Carlton & United Breweries which was finalized last year, although the ACCC acknowledged that this would mean the loss of a “significant competitor” in the market.

ACCC’s intervention only resulted in the forced sale of two “declining” brands, Stella Artois and Becks, to Heineken.

The industry body also criticized the ACCC’s two-year investigation of valve contracts, binding hotel companies to exclusive deals with suppliers, which was concluded in 2017. The Commission found that the contracts of fittings did not significantly lessen competition.

The industry association pointed out that at the time, brewers did not want to speak out.

“Several independent brewers have been reluctant to speak out publicly for fear of being targeted by ‘lockout’ contracts that expressly exclude the ability for retailers to stock their brands,” she said.

The IBA argued that these “lukewarm” decisions indicated that the ACCC is “either unwilling or unable to intervene in the current market in any meaningful way.”

“In view of past decisions of the ACCC, the IBA does not expect the acquisition of Fermentum Pty Ltd to be rejected, however, we believe it is important that our response be made public in the hope that future advocacy leads to a broader inquiry, ”Lethbridge wrote.

“At the very least, the IBA believes that ownership of beer brands should be clearly defined at the point of purchase so that consumers can make an informed purchasing decision. “

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