Australia: Beer sector sees steady growth in production despite drop in per capita consumption

Australia’s beer manufacturing industry has seen steady growth in recent years, despite a decline in per capita beer consumption, according to the latest research from IBISWorld, Food & Beverage Industry News reported on March 28.

The rise of craft beer has driven much of this growth, with consumers increasingly opting for higher-priced, premium beers over traditional options. As a result, craft beer sales have outpaced those of regular beer, and independent breweries have gained market share. In response, major brewers like Asahi and Lion have expanded their craft beer portfolios.

Lion’s 2021 acquisition of Fermentum Pty Ltd highlights how larger brewers are leveraging acquisitions to tap into the craft beer boom. IBISWorld’s market research projects the industry’s revenue will reach $8.7 billion by 2025, growing at an annual rate of 0.9 per cent between 2020 and 2025. The revenue growth has been supported by consumers shifting away from full-strength beers like Victoria Bitter and XXXX Gold and opting for more expensive craft beers.

Despite a drop in overall beer consumption, higher prices and greater spending per beer have helped maintain revenue levels.

The beer manufacturing industry in Australia remains concentrated in New South Wales and Victoria, where population density and market demand are highest. However, new breweries face challenges, including securing land, obtaining licenses, and competing for tap and shelf space.

The beer manufacturing industry is expected to continue growing until 2030, although increasing excise taxes may impact profit margins. Australia has the third-highest beer tax in the world, behind only Norway and Finland, which could affect the cost structures of breweries and their pricing strategies.

Traditional full-strength beers, such as Victoria Bitter, Carlton Draught, and XXXX Gold, remain the largest revenue drivers, despite their declining market share. Other categories, including mid-strength, light, and low-carb beers, are also growing, but have not yet surpassed full-strength beers in terms of revenue.

Overall, the industry is projected to be worth $8.7 billion, with competition rising as the number of breweries increases by 8% annually, bringing the total to 878 businesses. While beer consumption per capita has decreased—from 190 litres per person in 1974-75 to 82 litres per person in 2019-2020—revenue growth has been driven by the increasing demand for craft beer.

Despite the rise of craft beer, full-strength beer remains the most popular category, with brands like Victoria Bitter, XXXX Gold, and Carlton Draught still holding large market share. Most breweries are based in New South Wales and Victoria, where the consumer base is largest. The leading brewers by revenue are Asahi Holdings ($3.1 billion), Lion ($1.8 billion), and Coopers Brewery ($187 million).

In response to this growth in craft beer production and consumption, some State Governments thrown support behind the sector. The Western Australia Government has announced a new strategy to grow the state’s craft beer sector, create jobs and promote the industry’s ‘paddock to pint’ tourism experience.

Western Australia is considered the birthplace of Australia’s craft beer sector, with the establishment of a handful of now iconic breweries in Perth in the 1980s and 1990s. The inaugural Western Australian Craft Beer Strategy brings together all parts of the craft beer supply chain to drive forward a unified and sustainable industry.

The industry-led strategy aims to boost production, with the ambitious goal of tripling either the volume or value of locally produced beer over ten years. It also strives to improve supply chain integration, including those that produce homegrown barley, hops and malt, and the local businesses that provide packaging, distribution, and retail services.

There are now more than 120 breweries across the metropolitan area and regional WA, representing 20 per cent of the national industry.

“Our craft beer industry uses premium ingredients grown in the State’s agricultural sector and it’s that unique WA ‘paddock to pint’ experience that an increasing number of customers are drawn to,” said Agriculture and Food Minister Jackie Jarvis.

“It’s also a major draw card for tourists with more than 120 breweries across the State, half of which are in
our regions.

“The inaugural Western Australian Craft Beer Strategy will lay the groundwork for industry, Government and other stakeholders to collaborate and shape the future of the craft beer industry.”

Beer manufacturing contributed an estimated $648 million to the WA economy in 2020-21, directly supporting around 967 full-time jobs and indirectly supporting more than 4,000 jobs across Western Australia

The industry-led strategy was facilitated by the Department of Primary Industries and Regional Development as a partnering initiative with the Independent Brewers Association, Western Australian Brewers Association and Southwest Brewers Alliance.

The five strategic priorities are industry leadership, brand awareness, market access and export opportunities, supply chain management, and regulation.

Meanwhile, the Australian beer market is considered one of the most restricted globally, with two foreign-owned corporations, Lion (Kirin) and Carlton & United Breweries (Asahi), dominating beer supply. Additionally, two large companies dominate the retail beer sector.

Mergers, acquisitions, and regulatory factors have also shaped the market structure seen today. Market concentration in Australia is notable. As of 2024, publicly available data indicates that Lion holds a 33 per cent market share, CUB commands 50 per cent, major retailers Coles Group and Endeavour Group control five per cent, Coopers (a family-owned independent) holds five per cent, and Good Drinks Australia, an ASX-listed independent, has 1.25 per cent. The remaining 5.75 per cent of the market is shared by various independent breweries.

This independent sector figure is expected to continue to grow. In 2019, AB InBev (then owner of Carlton and United) described the Australian beer market as one of the most profitable worldwide, with a high value per hectolitre consumed.

At that time, AB InBev and Lion Nathan together held over 80 per cent of the market, both in volume and value.

The market was highly consolidated, with strong retailer relationships and modern trade structures giving both companies a competitive advantage.

All in all, the Australian beer manufacturing sector remains high profitable but also highly competitive, with 2025 expected to be another positive year.

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