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Home / Business

Battle brews for tap beer choice

NZ Herald
13 Nov, 2011 04:30 PM4 mins to read

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Independent Liquor CEO Julian Davidson wants to bring more competition to the tap beer market. Photo / Steven McNicholl

Independent Liquor CEO Julian Davidson wants to bring more competition to the tap beer market. Photo / Steven McNicholl

Independent Liquor is launching into the tap beer market to try to break apart what it says is a "cosy duopoly" between Lion and DB Breweries.

The Papakura-based company says two of the international brands it brews under licence, Carlsberg and Kingfisher, as well as its Boundary Road Craft range and Wild Buck New Zealand Ale, will be available on tap at bars around the country in the next month.

Chief executive Julian Davidson said the tap beer market - which he estimated was worth $900 million annually - was uncompetitive.

"A punter knows whether they are walking into Lion bar or a DB bar because there would be a large majority of bars that are under contract by those two brewers, which restrict the range to Lion or DB. What we want to do is force those two brewers to allow consumer choice," said Davidson, a former Lion managing director.

Lion's beer brands include Lion Red, Speight's, Steinlager and the Mac's range. DB Breweries has Tui, Monteith's, Export Gold and Heineken, among others.

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Independent is promising an aggressive market entry and its sales team began the tap beer push last week. But the company is not expecting an easy ride.

"Lion and DB have held this market for 150 years and I don't think they're going to let go of it without a fight," Davidson said.

"What I'm most prepared to engage in is a very fair fight."

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He said a highly competitive packaged beer market meant pricing for those products was "arguably far too cheap".

"That competition hasn't been available on-premise and it's certainly our intent to bring that competition into play."

DB managing director Brian Blake said he did not accept Independent's claim his company was part of a duopoly. "There's been fierce competition between DB and Lion for many years and there have been no barriers to others entering the tap market - it's simply that others have chosen not to do so," he said.

Lion external relations director Liz Read also disagreed with Independent's claim, saying the alcohol market was open to any company that wanted to have a go at entering it.

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"Bars and restaurants decide which beverage brands they want to stock and their decisions are dictated by consumer preference," she said.

Blake said DB was relaxed about having a new competitor entering the tap beer market, but the firm would defend the existing distribution arrangements it had with bars.

Whether a bar that stocked Lion tap beer would be able to also sell an Independent brand would depend on the commercial arrangement the bar had with the brewery, Read said.

She said it was not unheard of for a pub to stock both Lion and DB tap beer, so it was possible some pubs might end up selling brands from all three breweries.

Independent had already signed up a "substantial amount" of tap beer customers, said Davidson.

One of those is Auckland's Easy Tiger. Owner Rick Doran said the bar, near Vector Arena, would have Carlsberg on tap from next month.

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"As an independent operator, it has been limiting having DB and Lion as the only tap beer suppliers to date," Doran said. "I am pleased I now have an alternative and I welcome the competition into the tap beer market."

Independent's move would help Carlsberg "carve out its fair share" of the New Zealand on-premise market - an area in which it has been been underperforming, said Anders Rosendal, the Danish beer brand's regional manager.

Independent liquor was founded in Auckland in 1987 by Michael Erceg, who died in a helicopter crash near Raglan in 2005.

The company, which has a big share of the New Zealand ready-to-drink market, was acquired by Tokyo-listed Asahi, a Japanese brewer, in August for $1.5 billion.

BEER WARS

Independent liquor

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* Headquarters: Papakura.
* Owned by Japanese brewer Asahi.
* Beer brands include Carlsberg, Kingfisher and the Boundary Road Craft range.

DB Breweries

* Headquarters: Otahuhu.
* Owned by Asia Pacific Breweries, which is jointly owned by Heineken International and Fraser and Neave of Singapore.
* Beer brands include Tui, Monteith's, Export Gold, Heineken and Amstel Light.

Lion

* Headquarters: Sydney.
* Owned by Japanese company Kirin.
* Beer brands include Lion Red, Speight's, Steinlager, Stella Artois and the Mac's range.

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