The Obstacle Race
Lots of people have tried—and failed—to break the dominance of the Australian Big Two. Five brewpubs and one craft brewery have failed in Sydney in the past decade, while another six have failed in Melbourne. In late 1999, Sydney only had one brewpub and one craft brewer, while Melbourne also only had one brewpub.
Moreover, lots of obstacles stand in the way of new brewers. Talk to Australia’s small brewers, and you’ll find out that the two things they complain about most are bottles and taxes.
Australia’s beer taxes are among the world’s highest. Customs and Excise (the Australian equivalent of the BATF) charges a duty, based on the amount of alcohol produced, that averages 44 percent. And unlike in America, there are no breaks given to small brewers, who have to pay the same rates as their larger counterparts. (Small winemakers, by contrast, are given tax rebates.) Should the brewer sell to any account, he then has to pay a manufacturer’s sales tax of 37 percent.
In 2000, Australia will introduce a system of value-added taxes, and the manufacturer’s sales tax is to be replaced by a 10 percent goods and services tax. But some small brewers speculate that Customs and Excise will then boost the alcohol duty even more.
Whatever happens, it’s clear that small Australian brewers will have to pay hefty tax bills. Bob Wessler, an American expatriate who created Sydney’s Harbour Beer, calculates that his tax bill is five times higher than it would be in America. “My beer,” said Geoff Scharer, creator of Scharer’s Little Brewery in Picton, New South Wales, “is made of malt, hops, tax, tax, tax, and tax.”
Bottles are also inordinately expensive. A new brewer can’t just order standard bottles from a manufacturer. In Australia, it’s much more complicated.
There’s only one manufacturer of beer bottles in Australia, a company called ACI. ACI allows the big brewers to reserve molds for their bottles and deny them to competitors. Even homebrewers are affected. Since there are no bottle molds reserved for them, most homebrewers have to use recycled green 400 ml soy sauce bottles from Thailand.
As a result, a new brewer has to find a bottle mold that hasn’t already been reserved and then must pay very high prices. “A new guy buying his bottles from ACI will pay three times as much as Foster’s does,” said Philip Adkins, managing director of J. Boag and Son.
Bob Wessler knows this process well. When he was creating Harbour Beer, he discovered that it would cost almost as much to buy beer bottles from the United States and ship them to Australia as it would to buy them from ACI. And when he decided to pay ACI’s prices (and found a bottle mold that hadn’t been reserved), he then had to spend A$100,000 to buy the equipment his contract brewer, Cooper’s, needed to alter its bottling line to fit his bottles.
“Buying bottles,” Wessler said, “is one of the most difficult things about being a brewer in Australia.”