Too tasty for Lion to ignore

MIKE O'DONNELL

Last updated 05:00 17/11/2012

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OPINION: Last week I was lucky enough to stay at The White Swan Hotel in Greytown, home of the modern Arbour Day celebrations and claiming what is apparently one of the most complete main streets of Victorian architecture in New Zealand.

The White Swan began life as the New Zealand Railways administration building at the Woburn railyard in Lower Hutt, but in 2002 the building was cut into six pieces, relocated over the Rimutaka Range and reassembled in Greytown.

When I visited last week it offered great food, stylish rooms and warm service. The only thing missing was some great Kiwi craft beer.

Craft beers in New Zealand have moved from the fringe to the mainstream thanks to outfits such as Christchurch's Three Boys and Harrington's, and Wellington's Garage Project and Yeastie Boys. No such tasty brews were available at the White Swan, which I thought a tad unusual for such a tasty pub.

Then I noticed a pattern to all the brews on offer - which included Monteith's, Sol and Tiger - all were brewed or distributed by Heineken-owned DB.

It's pretty well known, by drinkers anyway, that New Zealand's brewing market is dominated by Japan-based Kirin and Netherlands-based Heineken. Together this duo controls virtually all of the big beer brands sold locally, from Steinlager and Canterbury Draft, to Heineken, Tui and Stella.

And last week Kirin grew a little larger thanks to its acquisition of Dunedin's Emerson Brewing Company, via its 100 per cent-owned local subsidiary Lion.

The purchase was more than a little ironic, given the colourful Richard Emerson set up his craft brewery in 1993 selling unpasteurised beer after becoming disillusioned with the generic taste of the big breweries' offerings.

I first sampled Emerson's when a Dunedin scientist mate sent me some London Porter claiming it had aphrodisiac qualities. Soon after, I discovered Bookbinder which became a quick favourite. Thereafter, if I was within 300 kilometres of Dunedin, I would detour via Wickliffe St and fill the boot of my gently corroding MGB Roadster.

Subsequently Richard Emerson became a central figure in the craft beer vanguard, celebrating taste, tradition and idiosyncrasy. The quality of his output became recognised globally, and invariably he attracted the attention of the Dutch and Japanese giants.

Contrary to the PR spin, I'm not convinced brewing moguls like acquiring small breweries. The little guys spend too much on ingredients and their volumes are too small to deliver the cost efficiencies of the mainstream brews, so the moguls begin "value engineering" them. And the iconoclastic founders often make poor team players. However, as the popularity of their product grows, so do the value of these crafty brands until they reach the point where they become too painful to ignore.

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I don't blame the big brewers for buying brands like Emerson's, Mac's and Monteith's - it's commercially astute, as long as they don't overpay. And I have nothing but admiration for the likes of Richard Emerson who turned a vision of quality ales into a global brand and a commercially successful company.

But there are two things that catch in my craw.

The first is, what will happen to the diverse and tasty lineup of unpasteurised beers that Emerson's offer up? Big brewers make money out of volume, and I would be surprised if the likes of Taieri George or Whisky Porter will last for long. Mind you, as my wife constantly reminds me, I am not in the middle of the bell curve when it comes to beer.

The second and more worrying thing is the impact of the large breweries tying up distribution in New Zealand. Pubs are not always particularly profitable businesses, so the rebate structures offered by the big brewers are hard to resist.

But enticing pubs to enter into these exclusive supply agreements keeps craft breweries out of pubs, and tasty brews away from customers' glasses.

More important from a commercial perspective is the exclusionary effect such control and incentivisation has on new entrants.

The Commerce Act has provisions which are designed to prevent a business taking advantage of its dominant position in a market for an anti-competitive purpose. I wonder if the independent brewers have ever thought of taking a class action against one of the two biggies?

If you go to Greytown, you should check out Stella Bull Park, named for the Wairarapa woman who did so much to make the town beautiful. There is a park bench there which notes: "Only God can make a tree."

I'm of the mind that only an iconoclast can make a truly great beer. It's just a shame that the incentivised distribution structure barricades these brews from the fridges of so many pubs in New Zealand.

Mike "MOD" O'Donnell is a professional director, author and eCommerce manager. He once had a cat named Emerson.

- © Fairfax NZ News

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