Foster’s under fire for locking out independent craft beers from pub taps

Beer giant SAB Miller, which owns Foster’s Group and operates the Carlton & United Breweries brand, has copped the wrath of consumer advocacy group CHOICE, which claims it is locking out independent craft beers from the taps at local pubs.

CHOICE has obtained contracts for tap beer supply which show terms requiring that Foster’s is the “exclusive supplier” of all light strength draught beer, all low carbohydrate beers, all domestic premium and sub-premium draught beers, all imported draught beers, all specialty and craft draught beers and all draught spirits and ciders.

Read more: How a Sydney craft brewery took on SABMiller in a two-year trademark battle and won

“It’s not uncommon for the big brewers to offer more money, rebates or other incentives for exclusive access to 80% or even 100% of pub taps, making it hard for independent brewers to get a fair go,” CHOICE spokesperson Tom Godfrey said in a statement released this morning.

“We know 83% of revenue in Australia flows to the big beer barons, Kirin and SABMiller. If exclusive dealing cuts competitors, forecloses markets and keeps competitors out, it may well be unlawful.”

Many beers which consumers believe are craft or independent beers are actually owned by the big brewers, including Little Creatures (Kirin), James Squire (Kirin), Fat Yak (SABMiller) and Matilda Bay (SABMiller) in a strategy CHOICE dubs “craft washing”. 

CHOICE’s investigation comes as the Australian Competition and Consumer Commission continues its investigation into the wholesale supply of beer to Australia’s pub industry, to determine whether anti-competitive behaviour is locking out rival beer brands.

Peter Philip, founder and head brewer at small craft brewer Wayward Brewing, told SmartCompany tap contracts are a problem he comes up against every day.

“It is the minority of pubs that wouldn’t have tap contracts with one of the big three and its endemic in the industry,” he says. 

“You can go into a bar and the publican loves your beer but says all my taps are contracted and I have no flexibility to put your beer on.”

Philip says large brewers install the taps in pubs which can cost as much as $30,000 but in return require the publican to use the brewer as their exclusive supplier of beer and dictate the price of the beer that is sold.

Independent craft brewers are then left with only being able to sell their product as bottles when taps are the main drivers of volume. 

“We have a much higher cost base than the larger brewers and it is just adding to our cost base,” Philip says.   

“It would be great if there wasn’t such a thing as tap contracts and every pub was independent.”

Spokesperson for Carlton & United Breweries, Jeremy Griffith, told SmartCompany it is not unusual for publicans to enter into contracts for the provision of beer, spirits and wine “and it is a long-standing practice”.

Griffith says many of these contracts provide discounts on the keg price, as well as investment in the pub such as cool rooms, tap lines and fridges.

“Overall, around 70% of our on-premise (pubs and clubs) customers do not have contracts, so overwhelmingly it’s an open market.”