Australian winemaker diversification into beer
Does the future of Australia’s new generation of brewers lie in the hands of our successful winemakers? This is the question small Australian brewers are now asking following the move by Casella Wines to diversify into beer.
Casella Wines, an Australian success-story as the owner of the Yellow tail brand, the most popular imported wine in the U.S., last week unveiled their new Arvo beer. Arvo will be brewed on-site in Yenda, New South Wales, alongside the Yellow tail wine facility. The Yenda brewery is capable of producing 300,000 hectolitres at a time, a similar capacity to the South Australian-based Coopers Brewery, the third major Australian beer player.
Coopers, based in South Australia, has only a 4% Australian market share. The Australian beer market is dominated by foreign-owned brewing duopoly, Lion (owned by the Japanese Kirin) and Foster’s (owned by the South African SABMiller). Lion and Foster’s together account for more than 90% of the market.
As Australian Food News reported, smaller brewers are concerned that the duopoly of Lion and Foster’s has curbed diversity and innovation in Australia’s brewing culture. The advent of successful Australian winemakers taking on brewing could provide an impetus for development of some of Australia’s existing boutique brewers.
Currently, Casella Wines exports 8 million cases of Yellow tail a year to the U.S. and income from its wine operations is about $400 million a year. Applying this track record in wine-marketing to brewing may signal an improved future for smaller Australian-made beer brands.
Casella Wines has already reached agreements to sell its Arvo brand to Woolworths and its Dan Murphy’s chain. Arvo beer will be produced in six-packs and slabs of 24 and will sell for about $45 a slab.
As the Foster’s demerger with Treasury Wine Estates showed, it is not easy for a mass beer producer to move into marketing for the wine industry. However, the converse may not apply when a thriving wine-marketing group such as Casella Wines can apply its niche-marketing skills and experience to selling beer. It may be easier to move from creating a discrete wine brand to the combination of niche and mass-marketing in the beer field.
If Casella’s diversification into beer inspires Australia’s successful wine-marketers to join forces with other small brewing operations, Australia’s beer industry would have the potential to generate many more winners.